At a recent Investor and Analyst Conference meet, Home Depot Inc. HD – the leading home improvement store chain – declared its key strategies to boost sales, operating profit as well as shareholder value over the next few years.
In the meeting, Home Depot discussed certain strategic priorities which include customer service, product authority, targeted growth areas, productivity and shareholder returns. These traits will include everything from putting customers first to making available the best and most innovative products at the best value to customers, as well as highlighting key areas of growth, incremental supply chain benefits and its approach to create shareholder value.
Additionally, the company reiterated its recently updated guidance for fiscal 2015 and unveiled long-term targets for the next three years (through fiscal 2018). The company also revealed that it is on track to reach its growth targets for fiscal 2015 that were laid down in Dec 2013. Consistent with this, the company expects operating margin growth of 13% and return on invested capital (ROIC) of 27% at the end of fiscal 2015.
Through the end of fiscal 2018, Home Depot targets sales of nearly $101 billion, representing a compounded annual growth rate (CAGR) of 4.7%. The company also set an operating margin growth target of 14.5%, while aiming to achieve ROIC of 35% by the end of fiscal 2018.
Further, Home Depot’s reaffirmed fiscal 2015 outlook projects sales growth of approximately 5.7%, along with a comparable-store sales increase of nearly 4.9%. Earnings are anticipated to come in at $5.36 per share, up about 14% from the previous fiscal. The company’s earnings per share guidance reflects the benefit of its plans to buy back $2 billion worth of shares in the fourth quarter. This will bring the company’s fiscal 2015 share repurchases to $7 billion.
Zacks Rank
Home Depot currently has a Zacks Rank #2 (Buy). Other favorably ranked stocks in the same industry include Tecnoglass Inc. TGLS, with a Zacks Rank #1 (Strong Buy), Beacon Roofing Supply Inc. BECN and Tile Shop Holdings Inc. TTS, both carrying a Zacks Rank #2.
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