Shares of Home Depot, Inc. HD have increased roughly 13% over the past one year. The company has been riding on its strategic growth catalysts, improved customer experience and robust financials.
Home Depot is a leading player in the highly-fragmented home-improvement industry. Also, the company has introduced significant changes in its store operations to make them simpler and more customer-friendly. It has been implementing several initiatives to drive long-term growth. These initiatives enable it to induce more traffic to its stores.
Going forward, Home Depot remains keen on building its interconnected capabilities. In order to achieve this, the company is constantly investing in content, developing its website and improving mobile experience to provide better customer experience. The benefits from these initiatives are evident from the 21.5% growth in online sales and double-digit online-traffic growth recorded in the first quarter.
Additionally, Home Depot’s interconnected strategy goes beyond the dot.com investments as it continues to invest in fulfillment options to cater to customers’ demand. Subsequently, the company has rolled out a new customer order management system (COM), which will be fully deployed in its U.S. stores by 2016 year end. Besides, it has launched the Buy Online Deliver From Store (BODFS) capability, enhancing the delivery process and targets to fully implement it by the end of fiscal 2016. These initiatives will drive the company’s top- and bottom-line growth in the long run.
The company recently commenced fiscal 2016 on a spectacular note, wherein it beat top and bottom-line estimates for the first quarter. Results benefited from the company’s focus on improving customer experience, solid execution and broad-based growth across the store, alongside a consistent housing market recovery.
Over the trailing four quarters, it beat the Zacks Consensus Estimate by an average surprise of 4.2%. Consequently, management raised guidance for fiscal 2016, leading to an uptrend in estimates. Over the past 60 days, the Zacks Consensus Estimate of $6.28 and $7.10 for fiscal 2016 and fiscal 2017 has increased 10 cents.
Currently, Home Depot carries a Zacks Rank #2 (Buy).
Stocks to Consider
Some other favorably-ranked stocks in the same industry include BMC Stock Holdings, Inc. BMCH, sporting a Zacks Rank #1 (Strong Buy); Beacon Roofing Supply, Inc. BECN and Lowe's Companies, Inc. LOW, both carrying a Zacks Rank #2.
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