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Home Depot Q4 Results Top Estimates, Guides 2015 EPS Below View


Home improvement retailer Home Depot, Inc. (HD) reported Tuesday a profit for its fourth quarter that grew 36 percent from last year, reflecting improved comparable store sales and higher customer transactions.

Both adjusted earnings per share and quarterly sales topped analysts' expectations. The company also provided adjusted earnings and sales growth guidance for the full-year 2015.

Further, the company's board declared a 26 percent increase in its quarterly dividend, and also authorized an $18 billion share repurchase program, replacing its earlier authorization.

"We had a strong finish to the year, as strength across the store, the recovering U.S. housing market and solid execution aided our business in 2014," President, Chairman and CEO Craig Menear said.

Menar, a 17-year veteran of the company, was elected to the additional role of chairman, effective February 2. He succeed Frank Blake, who retired as chairman. Menar had also succeeded Blake as CEO in November 2014.

The Atlanta, Georgia-based company reported net earnings of $1.38 billion or $1.05 per share for the fourth quarter, higher than $1.01 billion or $0.73 per share in the prior-year quarter. Results for the latest quarter include a gain of $0.05 per share, related to the sale of a portion of the company's equity ownership in HD Supply Holdings, Inc. (HDS).

Excluding the gain, adjusted net earnings for the latest quarter was $1.00 per share. On average, 27 analysts polled by Thomson Reuters expected the company to report earnings of $0.89 per share for the quarter. Analysts' estimates typically exclude one-time items.

Net sales for the quarter grew 8.3 percent to $19.16 billion from $17.70 billion in the same quarter last year, and topped twenty-three Wall Street analysts' consensus estimate of $18.70 billion.

Comparable-store sales for the quarter were positive 7.9 percent, and comparable sales for U.S. stores were positive 8.9 percent. Comparable-store sales is a key retail industry performance metric to gauge activity at store locations that have been open for at least a year.

Customer transactions for the quarter grew 5.1 percent, and average actual ticket increased 3 percent from last year.

At the end of the fourth quarter, the Company operated a total of 2,269 retail stores in all 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces and Mexico.

The company also announced that its board of directors declared a 26 percent increase in its quarterly dividend to $0.59 per share, payable March 26 to shareholders on record March 12, 2015.

Additionally, the company's board of directors authorized an $18 billion share repurchase program, replacing its previous authorization. The company said it has returned more than $53 billion of cash to shareholders through repurchases of about 1.2 billion shares since 2002 and through February 1, 2015.

Looking ahead to fiscal 2015, Home Depot currently expects adjusted earnings in a range of $5.11 to $5.17 per share, on projected year-over sales growth of nearly 3.5 to 4.7 percent, implying sales between $86.09 billion and $87.09 billion, based on annual sales of $83.18 billion reported in 2014. Comparable store sales growth is expected at about 3.3 to 4.5 percent.

Street is looking for full-year 2015 earnings of $5.23 per share on annual revenue growth of 4.5 percent to $86.46 billion.

HD closed Monday's regular trading session at $112.28, down $0.71 on a volume of 5.61 million shares. In the past 52-week period, the stock has been trading in a range of $74.61 to $113.16.

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