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Home Depot Sales Exceed Expectations

This month, Home Depot reported a better-than-expected profit and revenue in the fourth quarter. Comparable-store sales also jumped as the company gained momentum thanks to the recovery of the housing market.

As the nation’s largest home improvement retailer, its quarterly dividend boosted by 17% and shares rose early on Tuesday, Feb. 23. This is typically a down season for the home improvement industry. It is seen as a good omen, especially with tax return and home upgrade season rapidly approaching.

Home Depot earned $1.47 billion, about $1.17 per share, for the three months that ended on Jan. 31. Last year, the company earned $1.38 billion, or $1.05 per share.

Sales at stores open for more than a year rose 8.9% in the U.S. Analysts had expected sales to rise 5.3% on average.

The home goods and improvements sector isn’t the only area doing well — U.S. home sales crept up in January, despite the prediction of a decline by economists. Median homes sale prices were $213,800, up about 8.2% from a year ago, says the National Association of Realtors.

The growth in 2016 follows the big year in housing. Almost 1.1 million properties were begun in 2015.

Home Depot benefited from the rising home prices, and job, wage, and credit growth which has had more people willing to spend on improving their homes. The store sells everything from building materials and power tools to more mundane items such as light bulbs and pest control products.

“As the home improvement and housing markets bounce back, more and more homeowners are finally addressing some of those ongoing home maintenance projects such as pest control and prevention,” said Eric Ritchey, Owner, All Natural Pest Elimination. “When times are tough, many homeowners become a self-appointed exterminator to remove ants, termites, and other insects and pests such as rats and bees. They do their best job, but ultimately, only a professional pest control inspector and technician can give a home a thorough inspection and identify and address the home’s pest control needs properly and completely. During our thorough home inspections, we often catch many pressing issues that homeowners miss simply because they don’t know all of the things to look for like trained professionals do.”

Additionally, last holiday season, people were more likely to spend on big ticket items, like home improvement products and automobiles, rather than smaller items like clothing. This also helped boost the Atlanta-based home improvement giant’s earnings.

In fact, Home Depot actually exceeded its own expectations — its analysts said it would grow by 5.1 to 6%, rather than the actual 17%.

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