Home Depot Inc., the largest U.S. home-improvement retailer, posted third-quarter profit that topped analysts’ estimates as the recovering U.S. housing market prompted customers to spend more on home repairs.
Net income climbed 1.4 percent to $947 million, or 63 cents a share, from $934 million, or 60 cents, a year earlier, the Atlanta-based company said today in a statement. Excluding some items, profit was 74 cents. The average estimate of 25 analysts surveyed by Bloomberg was 70 cents. Sales rose 4.6 percent to $18.1 billion, topping the $17.9 billion average estimate.
The U.S. housing market is healing, with new-home sales rising to the fastest pace in two years and construction starting at the fastest rate in four years. The rebound has helped sales at Home Depot locations open at least a year gain 4.2 percent, the sixth straight quarterly increase, as customers visited more often and spent more per trip.
Home Depot “did an excellent job driving its sales growth with lower promotions,” John Tomlinson, an analyst at ITG Investment Research in New York, said today in an e-mail. “There is no doubt improvements in housing turnover and home prices are also positively impacting its sales trends.”
Home Depot rose 4.5 percent to $63.92 at 9:44 a.m. in New York and earlier climbed as much as 4.6 percent for the biggest intraday gain since Oct. 31. The shares climbed 45 percent this year through yesterday.
New-home sales in September climbed 5.7 percent to a 389,000 annual pace, the most since April 2010, according to the Commerce Department. Housing starts that month jumped 15 percent to the fastest rate since July 2008, a report last month showed. Beginning construction rose to an 872,000 annual rate, exceeding all forecasts in a Bloomberg survey, Commerce Department figures showed.
Americans’ real estate holdings have risen in value for two straight quarters, making them worth $730 billion more than at the end of 2011, Federal Reserve data show. More than 1.3 million homeowners who had owed more than their property was worth have moved above the breakeven point on their homes, according to CoreLogic of Santa Ana, California. U.S. home prices rose 4.6 percent in August from a year earlier, according to the service.
Those rising property values are bolstering household finances and spurring the consumer spending that accounts for 70 percent of the economy.
Sales this year will gain 5.2 percent, Home Depot said today. That’s up from a previous projection for a 4.6 percent gain. Profit excluding the effect of closing seven stores in China will be $3.03 a share, up from a previous forecast of $2.95 and topping the $2.98 average estimate.