Passers-by walk near an entrance to a Home Depot home improvement store Sunday, Feb. 21, 2021, in Boston. The Home Depot’s fiscal fourth-quarter sales surged 25% as the home improvement chain continues to meet the demands of consumers stuck at home and a resilient housing market. (AP Photo/Steven Senne)
The housing market was among the very few bright spots for the U.S. economy in the year of the lockdown and Home Depot became its supplier, racking up an unprecedented $132 billion in sales for 2020.
Sales grew even stronger in the final quarter of the year, surging 25% to $32.26 billion. That is up from $25.78 billion in the same period last year and exceeded even the lofty projections for $30.66 billion on Wall Street, according to a survey of analysts by Zacks Investment Research.
Home improvement stores became a beehive during the pandemic with millions working from home and attending school remotely. Many families concluded that bigger homes, or at least different homes, were the answer in 2020, driving prices sky high.
On Tuesday, the S&P CoreLogic Case-Shiller 20-city home price index recorded a 10.1% spike in December, compared with the same month last year. That topped the 9.2% jump the previous month, and all other months going back almost seven years.
While Home Depot was not alone in meeting the demand for hammers, paint or appliances that go along with a housing boom, the sheer volume of goods it sold this year were staggering.
Attempting to put that volume into context, Neil Saunders, the managing director of GlobalData, calculated that in 2020 the equivalent of every person in the United States spent $402 at Home Depot.
“It is easy to look at Home Depot’s numbers and chalk up its success to the pandemic,” Saunders said Tuesday. “However, sustaining three quarters of growth above 20% is extremely difficult in terms of the pressure it puts on the whole operation from supply chains to stores.”
Global sales at stores open at least a year, a key indicator of a retailer's health, climbed 24.5%, and by 25% if only U.S. stores are counted.
Home Depot Inc. earned $2.86 billion, or $2.65 per diluted share, for the three months ended Jan. 31 compared with $2.48 billion, or $2.28 per diluted share, a year earlier.
Earnings, adjusted for costs related to mergers and acquisitions, were $2.74 per share. That handily beat the $2.63 per share Wall Street was calling for.
The Atlanta company on Tuesday said that it was not providing annual guidance for the year, citing the uncertainty of the pandemic. Given the huge numbers Home Depot put up in 2020, that dispirited investors, and shares fell more than 3% at the opening bell.
However, in a show of confidence, the nation’s biggest home improvement chain boosted its quarterly dividend 10%, to $1.65 per share.
Featured Article: How Do You Calculate Return on Investment (ROI)?7 Entertainment Stocks That Are Still Delighting Investors
2020 has created a real-life movie script that many production companies could have only dreamed of. But that dream has been a nightmare for many of the world’s leading entertainment stocks. Movie theaters and live entertainment venues remain shut down. The words “pent-up demand” have never resonated more. Consumers are desperate for ways to be entertained.
That may make it an odd time to consider looking at entertainment stocks. But that would be a mistake. In fact, some entertainment stocks have been among the biggest pandemic winners. This is a trend that is likely to continue as the holidays arrive. The phrase “home for the holidays” is likely to have a new meaning this year. That means consumers will still be looking for ways to be entertained. And now is the time for you to prepare your portfolio for that move.
To be clear, the novel coronavirus was not due to poor management from any company. And you can bet that in the future, many companies will leave some room in their balance sheet for future “acts of God.” But in the meantime, some entertainment stocks have been pandemic winners. And that means they will likely continue to be winners as long as the pandemic lingers.
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