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Home Depot, Macy's, and Zulily Shares Pop

By Matt Thalman – Feb 25, 2014 at 1:00PM

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Major indexes all in the green despite a drop in housing prices in December.

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

As of 1 p.m. EST, the Dow Jones Industrial Average (^DJI -0.44%) was trading higher by 15 points, or 0.09%, the S&P 500 was up 0.05%, and the Nasdaq rose 0.01%. The S&P/Case-Shiller Home Price Indices, released today, indicated that housing prices have fallen for the second month in a row. For December, the 20-city index that tracks single-family homes prices in the major metropolitan locations around the U.S. fell by 0.1%. This follows a 0.1% decline in November, but on a year-over year basis the housing industry is still up and looking strong; with the final reading of 2013 now in the books, the index ended its best year since 2005. 

Despite the slight downtick in housing prices throughout the nation, shares of the Home Depot (HD -0.03%) were higher by more than 3.2%. The home-improvement retailer reported earnings this morning that beat on the bottom line but missed on the top line. Wall Street expected revenue of $17.92 billion and earnings per share of $0.71, but the company posted sales of $17.7 billion and EPS of $0.73. Home Depot also increased its dividend by 21% to $0.47 per share. The only real bad news was that guidance for the coming year was below what analysts were looking for. The company expects revenue of $82.59 billion for the full fiscal year, while Wall Street wanted to see $82.9 billion. Earnings per share are expected to hit $4.38, lower than the $4.42 analysts had estimated. All in all, though, these figures are strong and investors shouldn't be concerned about the slightly lower guidance.  

Macy's (M -0.15%) shares are up 4.7% after the department store chain reported fourth-quarter earnings this morning. The company posted revenue of $9.2 billion and earnings per share of $2.16, which both fell below analysts' estimates of $9.28 billion in sales and $2.17 in earnings. But the company saw strong 4.3% same-store sales during the holiday season, and management believes revenue at stores open more than a year will be up 2.5%-3% in the coming year. At a time when Sears and J.C. Penney are struggling with sales Macy's seems to have a winning strategy. Although everything is not perfect, investors seem to like what the company is doing.  

Lastly, the big winner of the day so far is Zulily (NASDAQ: ZU). The online flash sale retailer released quarterly earnings as a public company for the first time yesterday after the market closed and impressed investors. Shares of Zulily were higher by more than 39% today alone. The company earned $0.10 per share minus one-time items, while Wall Street expected EPS of just $0.03. Revenue hit $257 million, while expectations had been set at $225.5 million. Guidance for the coming quarter was set at sales of $225 million-$235 million and a net loss of $1 million-$5 million, but EBITDA earnings of $1 million-$5 million. Investors certainly believe that this new growth company can take off; they have pushed shares higher and the company's value to above $7 billion, despite the business not yet steadily turning a profit.  

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Matt Thalman owns shares of Home Depot. The Motley Fool recommends Home Depot. 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.

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Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$33,703.33 (-0.44%) $-149.20
Home Depot Stock Quote
Home Depot
HD
$313.98 (-0.03%) $0.09
Macy's Stock Quote
Macy's
M
$23.45 (-0.15%) $0.04

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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