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Category: Stock Market and HD Supply (HDS)
Date:21 September 2020 Stock Price of HD Supply (HDS): $40.20 We take a look at the 2nd 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. Revenues topped $1.55 billion for the quarter and net earnings came in at $132 million for the quarter.
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Our highest priority remains the health and safety of our associates and our customers as we continue to support the operations and re-opening of living spaces, job-sites and work places -Joe DeAngelo, Chairman and CEO of HD Supply"
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 2nd quarter 2020 earnings report
The data below refers to the latest quarter unless specified otherwise
- Net sales $1.552 billion (down from $1.624 billion from the same quarter of the previous year)
- Net sales decreased by -4.4% over the last 12 months
- Cost of sales: $956 million (down from $991 million for the same quarter of the previous year)
- Cost of sales decreased by -3.5% over the last 12 months
- Net income: $131 million (down from from $135 million for the same quarter of the previous year)
- Diluted earnings per share: $0.81 (up from $0.79 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 161.282 million (down from 170.056 million for the same quarter of the previous year)
- PE ratio: 12.6 (based on the earnings per share for the current quarter being reported for full fiscal year)
- Cash and cash equivalents: $71 million
- Cash and cash equivalents per share: $0.44
- Cash and cash equivalents makes up 1.10% of HD Supply's current market capital
- Cash and cash equivalents makes up 3.1% of HD Supply's total assets
- Inventories: $796 million (up from $771 million for the same quarter of the previous year)
- Inventories makes up 12.2% of HD Supply's total assets
- Accounts receivable: $795 million (up from $754 million for the same quarter of the previous year)
- Accounts receivable makes up 12.2% of HD Supply's total assets
- Total shareholders' equity of HD Supply': $1.550 billion
- Shareholders' equity per share: $9.61
- 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, Sept. 09, 2020 (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 second quarter of fiscal 2020 ended August 2, 2020, a decrease of $72 million, or 4.4 percent, as compared to the second quarter of fiscal 2019.
“Our highest priority remains the health and safety of our associates and our customers as we continue to support the operations and re-opening of living spaces, job-sites and work places,” stated Joe DeAngelo, Chairman and CEO of HD Supply. “Our financial strength and steadily improving results reflect the strength of our team and their dedication to safely delivering best-in-class service.”
“Our highest priority remains the health and safety of our associates and our customers as we continue to support the operations and re-opening of living spaces, job-sites and work places,” stated Joe DeAngelo, Chairman and CEO of HD Supply. “Our financial strength and steadily improving results reflect the strength of our team and their dedication to safely delivering best-in-class service.”
Business Unit Performance
Facilities Maintenance
Net sales decreased $69 million, or 8.3 percent, to $761 million for the second quarter of fiscal 2020, as compared to $830 million for the second quarter of fiscal 2019. Adjusted EBITDA decreased $17 million, or 11.4 percent, to $132 million for the second quarter of fiscal 2020, as compared to $149 million for the second quarter of fiscal 2019. Adjusted EBITDA was 17.3 percent of Net sales for the second quarter of fiscal 2020, a decrease of approximately 70 basis points from 18.0 percent for the second quarter of fiscal 2019.
Construction & Industrial
Net sales decreased $2 million, or 0.3 percent, to $793 million for the second quarter of fiscal 2020, as compared to $795 million for the second quarter of fiscal 2019. Adjusted EBITDA increased $11 million, or 11.6 percent, to $106 million for the second quarter of fiscal 2020, as compared to $95 million for the second quarter of fiscal 2019. Adjusted EBITDA was 13.4 percent of Net sales for the second quarter of fiscal 2020, an increase of approximately 150 basis points from 11.9 percent for the second quarter of fiscal 2019.
Second-Quarter Monthly Sales Performance
Net sales for May, June and July of fiscal 2020 were $431 million, $495 million and $626 million, respectively. There were 19 selling days in May, 20 selling days in June and 24 selling days in July of fiscal 2020 and fiscal 2019. Average year-over-year daily sales changes for May, June and July of fiscal 2020 as compared to fiscal 2019 were a decrease of 7.3 percent, a decrease of 4.8 percent and a decrease of 2.0 percent, respectively.
Preliminary August Sales Results
Preliminary Net sales in August 2020 were approximately $518 million, which represents a year-over-year average daily decline of approximately 0.7 percent. Preliminary August year-over-year average daily Net sales change by business segment was 1.1 percent growth in Facilities Maintenance and 2.5 percent decline in Construction & Industrial. There were 20 selling days in both August 2020 and August 2019.
Construction & Industrial Sale Transaction
On August 10, 2020, HD Supply entered into a definitive agreement to sell its Construction & Industrial business to an affiliate of Clayton, Dubilier & Rice for a purchase price of $2.9 billion payable in cash at closing. Net proceeds from the sale are expected to be approximately $2.5 billion after taxes and transaction costs. The transaction is expected to close in October 2020, subject to customary regulatory approvals.
2020 Outlook
The company will not be providing a third 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 second-quarter conference call.
Facilities Maintenance
Net sales decreased $69 million, or 8.3 percent, to $761 million for the second quarter of fiscal 2020, as compared to $830 million for the second quarter of fiscal 2019. Adjusted EBITDA decreased $17 million, or 11.4 percent, to $132 million for the second quarter of fiscal 2020, as compared to $149 million for the second quarter of fiscal 2019. Adjusted EBITDA was 17.3 percent of Net sales for the second quarter of fiscal 2020, a decrease of approximately 70 basis points from 18.0 percent for the second quarter of fiscal 2019.
Construction & Industrial
Net sales decreased $2 million, or 0.3 percent, to $793 million for the second quarter of fiscal 2020, as compared to $795 million for the second quarter of fiscal 2019. Adjusted EBITDA increased $11 million, or 11.6 percent, to $106 million for the second quarter of fiscal 2020, as compared to $95 million for the second quarter of fiscal 2019. Adjusted EBITDA was 13.4 percent of Net sales for the second quarter of fiscal 2020, an increase of approximately 150 basis points from 11.9 percent for the second quarter of fiscal 2019.
Second-Quarter Monthly Sales Performance
Net sales for May, June and July of fiscal 2020 were $431 million, $495 million and $626 million, respectively. There were 19 selling days in May, 20 selling days in June and 24 selling days in July of fiscal 2020 and fiscal 2019. Average year-over-year daily sales changes for May, June and July of fiscal 2020 as compared to fiscal 2019 were a decrease of 7.3 percent, a decrease of 4.8 percent and a decrease of 2.0 percent, respectively.
Preliminary August Sales Results
Preliminary Net sales in August 2020 were approximately $518 million, which represents a year-over-year average daily decline of approximately 0.7 percent. Preliminary August year-over-year average daily Net sales change by business segment was 1.1 percent growth in Facilities Maintenance and 2.5 percent decline in Construction & Industrial. There were 20 selling days in both August 2020 and August 2019.
Construction & Industrial Sale Transaction
On August 10, 2020, HD Supply entered into a definitive agreement to sell its Construction & Industrial business to an affiliate of Clayton, Dubilier & Rice for a purchase price of $2.9 billion payable in cash at closing. Net proceeds from the sale are expected to be approximately $2.5 billion after taxes and transaction costs. The transaction is expected to close in October 2020, subject to customary regulatory approvals.
2020 Outlook
The company will not be providing a third 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 second-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 $30.60 and its currently trading at $40.20, so that's 31.3% return over the last 5 years.
The stock is trading at closer to its 52 week high of $43.37 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 $43.37 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 Dbtnews.com
HD Supply Holdings Inc. [NASDAQ: HDS] loss -0.03% on the last trading session, reaching $39.29 price per share at the time. The company report on August 18, 2020 that HD Supply Holdings, Inc. Announces Fiscal 2020 Second-Quarter Earnings Release Date and Conference Call. HD Supply Holdings, Inc. (Nasdaq: HDS), one of the largest industrial distributors in North America, today announced that the company is planning to release its fiscal 2020 second-quarter press release on Wednesday, September 9th, at 6 a.m. (ET) to be followed by a conference call at 8 a.m. (ET). The conference call and presentation materials can be accessed via webcast by logging on from the Investor Relations section of the company’s website at hdsupply.com. The online replay will remain available for a limited time following the call.
To learn more about HD Supply, please visit the company’s website at hdsupply.com. HD Supply uses its website as a channel of distribution for material company information. Financial and other material information regarding HD Supply is routinely posted on the company’s website and is readily accessible. HD Supply Holdings Inc. represents 160.83 million in outstanding shares, while the company has a total market value of $6.42 billion with the latest information. HDS stock price has been found in the range of $38.50 to $39.60.
Read the full article here
HD Supply Holdings Inc. [NASDAQ: HDS] loss -0.03% on the last trading session, reaching $39.29 price per share at the time. The company report on August 18, 2020 that HD Supply Holdings, Inc. Announces Fiscal 2020 Second-Quarter Earnings Release Date and Conference Call. HD Supply Holdings, Inc. (Nasdaq: HDS), one of the largest industrial distributors in North America, today announced that the company is planning to release its fiscal 2020 second-quarter press release on Wednesday, September 9th, at 6 a.m. (ET) to be followed by a conference call at 8 a.m. (ET). The conference call and presentation materials can be accessed via webcast by logging on from the Investor Relations section of the company’s website at hdsupply.com. The online replay will remain available for a limited time following the call.
To learn more about HD Supply, please visit the company’s website at hdsupply.com. HD Supply uses its website as a channel of distribution for material company information. Financial and other material information regarding HD Supply is routinely posted on the company’s website and is readily accessible. HD Supply Holdings Inc. represents 160.83 million in outstanding shares, while the company has a total market value of $6.42 billion with the latest information. HDS stock price has been found in the range of $38.50 to $39.60.
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 $48.90 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 $48.90. We see a good entry point into the stock of HD Supply at $44 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 $48.90. We see a good entry point into the stock of HD Supply at $44 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 3rd quarter and full fiscal 2020 earnings report in early December 2020