Home Depot issues $15 billion stock buyback
Home Depot’s board of directors has authorized a $15 billion share repurchase program, replacing its previous authorization.
Since 2002 and through the third quarter of fiscal 2017, the Atlanta-based home improvement giant has returned approximately $73 billion of cash to shareholders through repurchases, repurchasing approximately 1.3 billion shares, Home Depot said in a statement issued Wednesday.
Home Depot also reaffirmed its forecast for the remainder of fiscal 2017, saying it expects sales to increase approximately 6.3% for the year, with an increase of comparable store sales of approximately 6.5%. For its most recent third quarter, Home Depot posted sales of $25 billion, up 8.1% from the same quarter last year.
The retailer has also disclosed a long-range, fiscal 2020 target, including total sales ranging from approximately $114.7 billion to approximately $119.8 billion and a compounded annual sales growth rate from the end of fiscal 2017 ranging from approximately 4.5% to approximately 6%. Other goals include an operating margin ranging from approximately 14.4% to 15%, annual capital spending of approximately 2.5% of sales, and a return on invested capital ranging from approximately 36.4% o 39.6%.
At the end of the third quarter, the company operated a total of 2,283 retail stores in all 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces and Mexico.
For the first nine months of 2017, Home Depot’s year-to-date sales were $77 billion — up 6.4% from sales of $72.4 billion in the first nine months of 2016.
Home prices pick up the pace
Housing experts are increasing their expectations for home price appreciation as rising prices show no signs of slowing.
Experts expect home prices to climb 4.1% in 2018, according to the 2017 Q4 Zillow Home Price Expectations Suervey, an increase in their expectations for 2018. One year ago, experts predicted home prices would grow 3% in 2018.
The quarterly survey, sponsored by Zillow and conducted by Pulsenomics LLC, asked more than 100 housing experts, market strategists, and economists about their expectations for the U.S. housing market in 2018 and beyond.
According to Zillow, the number of homes for sale has fallen on an annual basis for the past 33 straight months. Although building activity picked up slightly toward the end of the year, the biggest surprise of the 2017 housing market was the slow pace of single-family home building, according to the panelists. Only 16.7% expect it to change in 2018, a sign that limited inventory will still be a driving force in the housing market next year.
Experts believe 2017's low mortgage rates are likely to rise next year to around 4.5% from the current rate of about 3.9%. The average 30-year fixed mortgage rate has hovered around historical lows for years, and is well below the 6% rates seen during the run up to the housing bubble.
"The American labor market is stronger than it's been in decades and Americans, particularly young Americans, are increasingly feeling confident enough to buy homes," said Zillow senior economist Aaron Terrazas. "Home building has not kept pace with this surge in demand and remains well below historical norms. We don't expect that these demand-supply imbalances will fundamentally shift in 2018: Demand will continue to grow and, though supply should increase somewhat, we still won't build enough new homes to meet this demand, contributing to higher prices. Higher mortgage rates will eat into buyers' budgets, putting even more price pressure on the most affordable homes for sale. Unless there is a fundamental shift in the number and type of homes for sale, this is the new normal of the American housing market."