Home Depot's (HD 0.79%) profit machine keeps plugging along. The home-improvement retailer today announced first-quarter earnings results that included higher-than-expected profit and sales. Management also raised its full-year outlook as the housing market recovery continues.
Here's a look at how the headline results stacked up against Wall Street's targets:
| Metric | Expected | Actual |
| Revenue | $20.8 billion | $20.9 billion |
| Earnings | $1.15 per share | $1.16 per share |
"Expected" is the average forecast of the 27 analysts who cover Home Depot stock. Source: Company financial filings and Yahoo! Finance.
Sales and profits
Sales growth beat analysts', and management's, expectations, with comparable-store sales rising 6% globally and a whopping 7% in the U.S. market. While a slowdown from the prior quarter's 8% gain, that overall comps figure represents significantly faster growth than most retailers can manage these days.
Source: The Motley Fool.
"We had a stronger than expected start to the year as we experienced a more normal spring across much of the country and continued recovery of the U.S. housing market," CEO Craig Menear said in a press release. The "more normal" phrase refers to the extreme winter weather conditions that pushed sales growth down in the year-ago period.
Profits surged higher in the quarter, with earnings jumping 21% to $1.22 per share. Adjusting for a one-time tax benefit, Home Depot's per-share profit beat the Wall Street target by a penny.
Costs rose at a much slower pace than revenue, which improved profitability. Home Depot booked a 14% gain in operating income on just 2% higher costs. As a result, operating margin expanded from 11.6% of sales to 12.4%, putting the company on pace to easily reach its 13% long-term target this year.
Capital returns and outlook
Home Depot returned mounds of cash to shareholders in the quarter. Management spent $1.1 billion buying back stock, reducing the outstanding share count by 5%. The company's capital allocation plan calls for spending an additional $3.4 billion on buybacks this year as part of an $18 billion outlay through 2017. Home Depot also paid out $770 million in dividends, up from $650 million a year ago.
Meanwhile, Menear and his executive team raised their 2015 sales and profit guidance. Prior expectations had Home Depot booking comps growth of between 3.3% and 4.5%. But management now sees comps rising by between 4% and 4.6%, or just slightly below 2014's 5.5% jump. That's impressive considering that currency exchange rates are expected to lop $1 billion from the company's top line in 2015.
Home Depot now projects earnings to improve by double digits to roughly $5.25 per share this year, up from the initial target of $5.14 per share. The updated goal is just ahead of Wall Street's expectations.
