Home Depot Inc (NYSE:HD) released its Q1 results on Tuesday and it was a mixed bag as earnings came in ahead of estimates, but sales were disappointing.
Earnings per share for the quarter totaled $2.08, which beat expectations of $2.05. However, sales of $24.95 billion came in below the $25.15 billion that analysts were expecting for the hardware store. Same-store sales were up 4.2% and also came in below expectations of 5.4%.
The company blamed the weather on its poor showing for the spring, but Chief Financial Officer Carol Tome stated that Home Depot was seeing progress this month, noting that “Month to date, our May comparable sales are double-digit positive.”
It’s expected that sales in the coming months will be stronger as the weather picks up and home improvement projects that were delayed due to poor spring weather move into the summer months.
However, even if Home Depot does see an improvement later this year, it’s still debatable whether the stock is a good buy today. In its previous quarter, Home Depot did see strong sales growth of 7.5%, but profits were up just 2%. With growing competition from online retailers, it’s only going to be more difficult for Home Depot to continue to grow its top line.
Currently, the stock trades at 24 times its sales and it’s hard to justify paying much of a premium for a company that may have seen its best days behind it. The stock has risen nearly 20% in the past year, but year-to-date returns have been flat as in recent months the share price has struggled to gain any momentum.
