ATLANTA (AP) — Home Depot beat Wall Street expectations for the third quarter thanks in part to natural disasters that skewed economic growth and hiring in North America.
The Atlanta home improvement retailer is one of the inadvertent winners in the aftermath of Harvey and Irma, massive storms that struck Texas and Florida, leaving billions in damages and shaving as much as at least one-half of 1 percentage point off annual growth for the U.S. in the same quarter.
Wildfires that raged across the West destroyed thousands of homes and in Mexico, where the Home Depot also has stores, there were a pair of deadly earthquakes and also hurricanes.
Home Depot Inc. raised its outlook for the year.
"The devastation caused by hurricanes and wildfires has been anything but a disaster for Home Depot, with the rebuilding efforts pushing already strong sales growth even higher," writes Neil Saunders, the managing director of GlobalData Retail. "This quarter's 8.1 percent lift in net revenue and the 7.9 percent rise in comparables are both well above the long-run average. The good news is that this elevated demand is likely to continue for at least a couple more quarters, which is one of the reasons Home Depot has raised its full-year guidance."
The company earned $2.17 billion, or $1.84 per share, for the three months ended Oct. 29. That's 3 cents better than expected, according to a survey by Zacks Investment Research. The company last year during the same period earned $1.97 billion, or $1.60 per share.
Revenue also rose to $25.03 billion, from $23.15 billion, to be analyst projections of $24.52 billion.
Sales at stores open at least a year, a key gauge of a retailer's health, rose 7.9 percent. In the U.S., they climbed 7.7 percent.
The company attributed about $282 million in same-store sales growth to the hurricanes. It was not unscathed, however, and the storms dinged operating profit by approximately $51 million.
The retailer now anticipates 2017 earnings will rise about 14 percent from a year earlier, to $7.36 per share. That's about 3 cents better than industry analysts are projecting, according to FactSet.
Revenue is now expected to be up about 6.3 percent, with same-store sales rising approximately 6.5 percent.
It remains difficult to quantify the effect of the U.S. housing market on Home Depot and its rival, Lowe's Inc., which reports earnings next week.
Construction of new homes fell 4.7 percent in September, the biggest decline in six months, reflecting weakness in both single-family activity and apartment building. The report from the Commerce Department last month shows construction at a seasonally adjusted annual rate of 1.13 million units, which was the sharpest decline since a 7.7 percent fall in March.
Homebuilding has been sliding this year, but economists remain optimistic that the low level of unemployment will soon spark a rebound in sales and construction. Even though construction activity has fallen in recent months, home building is 6.1 percent higher than a year ago.
Housing trends are just the start, however, and it's likely to be a busy call with analysts later on Tuesday.
"We'll be listening for commentary regarding the future impact of recent natural disasters in the US and Mexico, home-buying and home improvement spending trends among millennials, an update on (Home Depot's) e-commerce initiatives, holiday plans and expectations, and the management's view on the potential impact of changes to the US tax code or to NAFTA," wrote Kate McShane, an analysts with Citigroup.
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on HD at https://www.zacks.com/ap/HD