Home Depot Writes Big Tickets

To judge by this morning's second-quarter earnings release, no one told Home Depot (NYSE: HD) consumers that they were supposed to be less confident. While the summer's financial headlines have been full of dire sales warnings for everyone from Ford (NYSE: F) to Wal-Mart (NYSE: WMT), customers with a tendency to tinker don't seem to have had any trouble opening up their wallets. Revenues had a brisk rise at Lowe's (NYSE: LOW), as Phil Wohl mentioned yesterday.

Today, we learn that the average Home Depot home improver spent 8.2% more per purchase -- just more than four bucks -- to help push comps up 4.8%. All told, the big orange retailer notched sales of $20 billion for the quarter, 11% better than last year's tally. Earnings per share shot up even more, rising 25% to $0.70 per stub.

If you're interested in investing in companies that know how to deliver for the shareholder, you will probably dig what Home Depot is doing. At the top of the sheets, check out the 2.2% improvement in gross margin. Multiply by $20 billion, and you get an idea of what that can do for the bottom line. Mix in generous stock buybacks, such as the $6 billion recently spent, with another $1 billion on the way, and you have a recipe for reliable investor rewards.

If you need to pick nits, well... SG&A popped up 1.4% this quarter as a portion of revenues. Trimmer operations would have made things even sweeter.

For the full year, management raised its earning guidance from 10-14% to 14-17%. Even after today's 4% pop, shares are priced at about 17 times earnings. OK, that's not a thumping cheap value. But given the firm's solid consistency and opportunities for growth in Mexico and China, investors would be Foolish to hoard a little Home Depot, especially if it can be purchased during the occasional market discounts.

Before he started penning The Motley Fool Inside Value , longtime Fool Philip Durell was one of those who saw the value in a beaten down Home Depot stock. Let him help you see what the Street is missing today.

Seth Jayson isn't surprised to learn that his average Home Depot ticket far exceeds the average, but he has no position in any company mentioned. View his Fool profile here.