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Home Depot (NYSE:HD) posted quarterly results this week that showed off the power of its balanced retailing business model. Sales growth accelerated from the prior quarter and earnings spiked higher by double-digits. The company also raised its 2016 profit outlook for the third time this year.

Here's how the big-picture results stacked up against the prior year.

 Metric

Q3 2016 Actuals

Q3 2015 Actuals

Growth (YOY)

Revenue

$26.5 billion

$24.8 billion

6.6%

Net income

$2.4 billion

$2.2 billion

9.3%

EPS

$1.97

$1.73

13.9%

Data source: Home Depot's financial filings. YOY = year over year.

What happened this quarter?

Sales growth trends improved thanks to an uptick in average customer spending even as traffic trends held steady.

Highlights of the quarter included:

  • Comparable-store sales jumped by 6%, marking a boost over the prior quarter's 5% and the 7% figure from the first quarter. That pace puts Home Depot in a class of its own among major national retailers. It is on pace to grow comps by 5% this year, compared to rival Lowe's (NYSE:LOW) expected 4% gain.
  • Comps were powered by a good mix of customer traffic growth (up 2.4%) and higher average spending (up 3.1). Both figures improved from the prior quarter, with the biggest gain coming from average spending, which benefited from strength in categories such as appliances, tools, and lumber.
  • Online sales rose 17% to account for a healthy 6% of the business.
  • Gross profit expanded at a slightly faster pace than sales, rising 6.3% to pass $8 billion.
  • Operating income improved to 14.3% from 13.7%. Lowe's comparable figure is just 9%.
  • Management showed good discipline on expenses, holding them to just a 3% increase. That execution led to a 14% spike in net profit to nearly $2 billion.
  • Stock repurchases pushed the outstanding share count down by nearly 4% to power a 19% spike in earnings per share.

What management had to say

CEO Craig Menear sounded an encouraging tone about Home Depot's latest operating trends. "We experienced balanced sales growth in the quarter driven by an increase in both ticket and transactions, and our continued focus on productivity drove double-digit earnings-per-share growth," he said in a press release.

Product departments that grew at an above-average rate included appliances, lumber, lighting, and flooring, executives explained. Home Depot also managed market-beating gains in categories tailored to its professional customer segment such as fencing, commercial lighting, and pressure-treated decking.

Looking forward

Menear and his team left their full-year sales growth forecast in place and still expect to boost comps by 4.9%. That marks a slight slowdown from last year's 5.6% bounce, and the gap appears to be due to a deceleration of customer traffic growth. Transactions are running at a 2.9% higher pace through the first nine months of 2016, compared to a 4% increase for the full 2015 fiscal year.

Home Depot is gaining customers at a market-thumping rate, even if that pace has slowed a touch from the past two years. Meanwhile, the retailer is generating significantly higher profits. Executives raised their earnings guidance for the third straight time and now expect to produce $6.33 per share for a 16% increase over last year.

Over the longer term, the retailer hopes to grow at a 5% compound rate over the next few years before passing $100 billion in annual sales by the end of 2018, when it also aims to achieve steady operating margin of 15% of sales. This week's results keep Home Depot right on track to hit those ambitious goals, assuming economic growth trends hold steady or even improve.

Demitrios Kalogeropoulos owns shares of Home Depot. The Motley Fool recommends Home Depot. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.