Home Depot’s EPS declines 1.3% in 2024 and expects further 3% drop in 2025

Overview

The Home Depot delivered solid financial results for the fourth quarter and full fiscal year 2024, reflecting resilient consumer demand and strategic investments in its business. The company reported total annual revenue of $159.5bn, marking a 4.5% year-over-year increase. Strong financial performance was driven by a 14-week fourth quarter, operational efficiency, and continued execution of strategic initiatives. Despite headwinds in large-scale remodeling projects due to macroeconomic uncertainty and higher interest rates, the company maintained steady profitability.

CEO Ted Decker highlighted the company’s resilience: “Our fourth quarter results exceeded our expectations as we saw greater engagement in home improvement spend, despite ongoing pressure on large remodeling projects. Throughout the year, we remained steadfast in our investments across our strategic initiatives to position ourselves for continued success, despite uncertain macroeconomic conditions and a higher interest rate environment that impacted home improvement demand. I would like to thank our associates for all that they do to serve our customers and communities.”

Q4 2024 vs. Q4 2023:

• Revenue reached $39.7bn (+14.1% YoY), primarily due to an additional operating week.
• Comparable sales increased 0.8% overall, with U.S. comparable sales rising 1.3%, indicating steady demand.
• Operating income rose to $4.5bn (+8.5% YoY), with operating margin of 11.3% (compared to 11.9% in 2023).
• Net earnings grew to $3.0bn (+7% YoY), while diluted EPS increased to $3.02 (compared to $2.82 in 2023), boosted by an additional operating week which contributed approximately $0.30 per share.
• Quarterly dividend increased by 2.2% to $2.30 per share, resulting in an annualized payout of $9.20 per share.

Full-Year 2024 highlights:

• Total revenue recorded a value of $159.5bn (+4.5% YoY), with comparable sales declined 1.8% due to pressures in large-scale remodeling projects and higher borrowing costs affecting consumer behavior.
• Operating income decreased slightly to a value of $21.5bn (-0.8% YoY), with operating margin of 13.5% (compared to 14.2% in 2023).
• Net earnings were $14.8bn (-2.2% YoY), with diluted EPS declined to $14.91 (-1.3% YoY), largely impacted by higher operating expenses and interest costs.
• The company ended the year with 2,347 stores, including over 780 branches across the U.S., Canada, and Mexico.

In 2025, The Home Depot anticipates steady growth, with total sales expected to rise by approximately 2.8% and comparable sales increasing by 1.0% over the comparable 52-week period. The company plans to expand its footprint with around 13 new store openings while maintaining a strong gross margin of 33.4% and an operating margin of 13.0%. Adjusted operating margin is projected at 13.4%, reflecting operational efficiencies. Despite a tax rate of approximately 24.5% and net interest expenses of $2.2bn, the company expects a slight decline in diluted EPS by 3% from fiscal 2024, with adjusted EPS decreasing by around 2%. Capital expenditures will remain disciplined at 2.5% of total sales, ensuring continued investment in store enhancements and strategic initiatives to drive long-term growth.

After reporting the results, which with few exceptions managed to beat analysts’ estimates, HD shares experienced a price appreciation that even exceeded the symbolic threshold of $400, and at the time of writing, the price has experienced an increase of approximately +3% since the publication of the results. However, this appreciation comes during a difficult period for the main US markets, and in the last month, the company’s shares are trading at a lower price by almost -8%.

Author: Ionuț-Adrian Lazar