Home Depot stock jumped this week as the retailer showed a strong second-quarter profit and improved its outlook for the year.
The company is showing more optimism about its future earnings prospects after strong sales in its second quarter and effective cost-cutting measures, the Associated Press reported. And that confidence has Wall Street more optimistic on Home Depot and its stock as well, the report said.
The world’s largest home-improvement retailer reported second-quarter results on Tuesday, showing a 12 percent increase in net income.
Home Depot upped its full-year earnings expectations on the strength of the performance so far. In-store revenue is up 2.1 percent, and for US stores that percentage jumps to 2.6 percent. It was helped in part by a warmer-than-usual late winter and spring, which allowed shoppers to start the gardening and landscaping shopping season earlier.
The slow housing market has also played into the company’s favor and Home Depot stock’s advantage, leading more homeowners to look for repairs and home renovations rather than moving up to new homes. Even as the housing market improves it will benefit Home Depot as contractors and construction firms look there for supplies.
Home Depot now expects sales to rise 4.6 percent and earnings to reach $2.95 per share.
The company’s rise has the attention of investors and analysts alike. Brian Nagel, an analyst at Oppenheimer, said the company had a “better run today than it’s ever been run,” NBCNews.com reported. Nagel praised the company’s ability to keep expenses down as well.
“It’s very encouraging,” he said. “As sales continue to gradually improve, you’re seeing them control their costs very very well.”
Home Depot stock rose 3.14 percent on Tuesday in heavy volume trading, rising $1.66 to close to $54.50.