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Shares of The Home Depot (HD - Free Home Depot Stock Report), the world's largest home-improvement retailer, were up nicely following the release of fiscal fourth-quarter financial results (year ended January 28th). Sales in the period rose 7.5% from a year earlier, to $23.883 billion, besting our estimate of $23.554 billion. Comparable-store sales jumped 7.5%, while stores in the United States posted a 7.2% comp gain. Underlying demand for its vast array of products was clearly solid, and led to adjusted earnings of $1.69 a share, or 17% higher, year over year. Please note that our bottom-line figure for the fourth quarter of fiscal 2017 excludes $0.17 of charges that stemmed from the impact of the Tax Cuts and Jobs Act, as well as the one-time bonus payments to hourly associates that was announced on January 25th. 

As for the year, fiscal 2017 was a good one for The Home Depot. Sales exceeded $100 billion for the first time in the company's history, and profits reached $7.45 a share, or almost 16% better than fiscal 2016's tally.

Looking ahead, management provided guidance for fiscal 2018. More specifically, it expects to open three new stores during the year, and for the gross margin to hold steady in the neighborhood of 34%. In addition, the company plans to buy back $4.0 billion worth of common stock, and for its corporate tax rate to fall to 26% (it usually pays around 36%). According to leadership, this will all help share profits reach $9.31, which would represent a year-over-year gain of 25%. Management's guidance, in our view, appears reasonable, and is consistent with our estimates. Simply put, we are bullish in regard to Home Depot's business prospects, since we believe it will continue to benefit from the favorable housing market. What's more, repair and rebuilding efforts are ongoing in several markets, which should further enhance store traffic and sales.  

In addition to providing fiscal fourth-quarter results and guidance, the board of directors declared a 15.7% increase to the quarterly dividend. The $1.03 a share payment is scheduled for March 22nd to shareholders of record on March 8th. Home Depot's yield is now 2.2%, which is ahead of the Value Line median of 2.0%.

As for the stock, we continue to believe that it would make a fine addition to most equity portfolios. In particular, conservative buy-and-hold accounts may be enticed by its top rank for Safety, high marks for Price Stability and Earnings Predictability, and its above-average dividend yield.

About the Company:The Home Depot, Inc. operates a chain of 2,275 retail building supply/home improvement “warehouse” stores across the United States, Canada, and Mexico. The company's average store size is around 104,000 square feet indoor, plus 24,000 additional square feet in its garden centers. The Home Depot's product lines include building materials, lumber, floor/wall coverings, plumbing, heating, electrical, paint and furniture, seasonal and specialty items, and hardware and tools. 

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.