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Category: Stock Market and HD Supply
Date: 10 June 2020 Stock Price: $36.57 We take a look at the 1st quarter earnings release of their 2020 fiscal year of HD supply one of the leaders of construction supplies in North America with 270 branches in 36 states and across 6 Canadian provinces
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About HD Supply
HD Supply (www.hdsupply.com) is one of the largest industrial distributors in North America. The company provides a broad range of products and value-add services to approximately 500,000 customers with leadership positions in the maintenance, repair and operations and specialty construction sectors. Through approximately 270 branches and 44 distribution centers in the U.S. and Canada, the company's more than 11,000 associates provide localized, customer-tailored products, services and expertise.
Overview of HD Supply's 1st quarter 2020 earnings report
The data below refers to the latest quarter unless specified otherwise
- Net sales $1.395 billion (down from $1.493 billion from the same quarter of the previous year)
- Net sales decreased by -6.6% over the last 12 months
- Cost of sales: $845 million (down from $908 million for the same quarter of the previous year)
- Cost of sales decreased by -6.9% over the last 12 months
- Net income: $72 million (down from from $107 million for the same quarter of the previous year)
- Diluted earnings per share: $0.45 (up from $0.63 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 161.190 million (down from 170.712 million for the same quarter of the previous year)
- PE ratio: 20.3 (based on the earnings per share for the current quarter being reported for full fiscal year)
- Cash and cash equivalents: $147 million
- Cash and cash equivalents per share: $0.91
- Cash and cash equivalents makes up 2.48% of HD Supply's current market capital
- Cash and cash equivalents makes up 3.1% of HD Supply's total assets
- Inventories: $832 million (up from $766 million for the same quarter of the previous year)
- Inventories makes up 17.4% of HD Supply's total assets
- Accounts receivable: $863 million (up from $732 million for the same quarter of the previous year)
- Accounts receivable makes up 14.4% of HD Supply's total assets
- Total shareholders' equity of HD Supply': $1.413 billion
- Shareholders' equity per share: $8.76
- So HD Supply is trading at 4.2 times the stockholders equity per share which is outside the expected range of between 2 and 4 times that most firms tend to trade at.
- For some perspective the average price to book value of firms in the S&P 500 is 3.7
HD Supply's management commentary on their 1st quarter 2020 earnings report
ATLANTA, Dec. 10, 2019 (GLOBE NEWSWIRE) -- HD Supply Holdings, Inc. (NASDAQ: HDS), one of the largest industrial distributors in North America, today reported Net sales of $1.6 billion for the third quarter of fiscal 2019 ended November 3, 2019, an increase of $32 million, or 2.0 percent, as compared to the third quarter of fiscal 2018.
Business Unit Performance
Facilities Maintenance
Net sales increased $16 million, or 2.0 percent, to $826 million in the third quarter of fiscal 2019, as compared to $810 million for the third quarter of fiscal 2018. Adjusted EBITDA was flat in the third quarter of fiscal 2019 as compared to the third quarter of fiscal 2018. Adjusted EBITDA was 18.0 percent of Net sales for the third quarter of fiscal 2019, down 40 basis points from 18.4 percent for the third quarter of fiscal 2018.
Construction & Industrial
Net sales increased $15 million, or 1.9 percent, to $818 million in the third quarter of fiscal 2019, as compared to $803 million for the third quarter of fiscal 2018. Adjusted EBITDA decreased $1 million, or 1.0 percent, to $98 million for the third quarter of fiscal 2019, as compared to $99 million for the third quarter of fiscal 2018. Adjusted EBITDA was 12.0 percent of Net sales for the third quarter of fiscal 2019, down 30 basis points from 12.3 percent for the third quarter of fiscal 2018.
Third-Quarter Monthly Sales Performance
Net sales for August, September and October of fiscal 2019 were $521 million, $494 million and $629 million, respectively. There were 20 selling days in August, 19 selling days in September and 25 selling days in October in both fiscal 2019 and fiscal 2018. Average year-over-year daily sales growth for August, September and October was 1.6 percent, 2.6 percent and 1.7 percent, respectively.
Preliminary May Sales Results
Preliminary Net sales in May 2020 were approximately $431 million, which represents a year-over-year average daily decline of approximately 7.3 percent. Preliminary May year-over-year average daily Net sales decline by business segment was 13.4 percent in Facilities Maintenance and 1.4 percent in Construction & Industrial. There were 19 selling days in both May 2020 and May 2019. May’s Net sales performance improved throughout the month in both Facilities Maintenance and Construction & Industrial.
2020 Outlook
The company will not be providing a second quarter 2020 or fiscal full year 2020 outlook in light of the ongoing coronavirus disease (“COVID-19”) outbreak. A further discussion relating to the ongoing impact of COVID-19 will take place on our fiscal 2020 first-quarter conference call.
HD Supply (NASDAQ: HDS) stock price history
The image below obtained from Google shows the stock price history of HD Supply over the last 5 years. Its been a decent time for HD Supply stockholders. While the stock has not shot the lights out in the last 5 years it has given stockholders a recent return over the last 5 years. 5 years ago the stock was trading at $33.60 and its currently trading at $36.57, so that's 8.8% return over the last 5 years.
The stock is trading at closer to its 52 week high of $43.25 than it is to its 52 week low of $21.69 showing us that the short term sentiment and momentum towards HD Supply is positive at this point in time.
The stock is trading at closer to its 52 week high of $43.25 than it is to its 52 week low of $21.69 showing us that the short term sentiment and momentum towards HD Supply is positive at this point in time.
Recent coverage of HD Supply
The extract below covers the latest regarding HD Supply as obtained from TheStreet.com
Shares of HD Supply (HDS) - Get Report were rising in trading Wednesday after the company announced its intention to separate its Facilities Maintenance division from its Construction & Industrial business into two independent publicly traded companies. The separation is expected to be completed by the middle of fiscal 2020.
"After years of growth, Facilities Maintenance and Construction & Industrial have achieved sufficient scale to operate as independent companies," said CEO Joe DeAngelo. "Each business is now positioned as a leader in its respective market and has the ability to enhance its competitive advantage by further differentiating its best-in-class customer service through additional focus." The Facilities Maintenance division, which will be renamed HD Supply Facilities Maintenance, generated about $3 billion in net sales in fiscal 2018 ended Feb. 3, 2019. DeAngelo will serve as CEO.
Read the full article here
Shares of HD Supply (HDS) - Get Report were rising in trading Wednesday after the company announced its intention to separate its Facilities Maintenance division from its Construction & Industrial business into two independent publicly traded companies. The separation is expected to be completed by the middle of fiscal 2020.
"After years of growth, Facilities Maintenance and Construction & Industrial have achieved sufficient scale to operate as independent companies," said CEO Joe DeAngelo. "Each business is now positioned as a leader in its respective market and has the ability to enhance its competitive advantage by further differentiating its best-in-class customer service through additional focus." The Facilities Maintenance division, which will be renamed HD Supply Facilities Maintenance, generated about $3 billion in net sales in fiscal 2018 ended Feb. 3, 2019. DeAngelo will serve as CEO.
Read the full article here
HD Supply (NASDAQ: HDS) latest stock valuation
So what are HD Supply stock worth after the release of their latest earnings report? Based on HDS' latest earnings report and their fiscal guidance provided for their full fiscal 2019, our valuation model provide a target (full value) price for HD Supply at $45.60 a stock. We therefore feel the stock of HD Supply is undervalued at its current price.
We usually recommend that long term fundamental and value investors look to enter a stock at least 10% below our target price which in this case is $45.60. We see a good entry point into the stock of HD Supply at $41 or below.
We expect the stock of HD Supply to kick up from current levels to levels closer to our target price (full value price) in coming weeks and months.
We usually recommend that long term fundamental and value investors look to enter a stock at least 10% below our target price which in this case is $45.60. We see a good entry point into the stock of HD Supply at $41 or below.
We expect the stock of HD Supply to kick up from current levels to levels closer to our target price (full value price) in coming weeks and months.
Next earnings release of HD Supply
It is expected that HD Supply will release their 4th quarter and full fiscal 2019 earnings report in early March 2020