Momentum Stock in Focus: HD Supply Holdings, Inc. (HDS)

HD Supply Holdings, Inc. (NASDAQ:HDS) reported earnings for the three months ended April 2016 on June 07, 2016. The company earned $0.51 per share on revenue of $1.78B. Analysts had been modeling earning per share of $0.47 with $1.84B in revenue.

HD Supply Holdings, Inc. (NASDAQ:HDS) reported Net sales of $1.8 billion for the first quarter of fiscal 2016 ended May 1, 2016, an increase of $121 million, or 7.3 percent, as compared to the first quarter of fiscal 2015.  The company believes its sales performance represents growth of approximately 400 basis points in excess of its market growth estimate.

  • Net Sales increased 7 percent to $1,781 million ($1,844 million including Interior Solutions)
  • Operating Income improved 14 percent to $178 million
  • Adjusted EBITDA increased 14 percent to $215 million

Gross profit increased $50 million, or 8.9 percent, to $609 million for the first quarter of fiscal 2016 as compared to $559 million for the first quarter of fiscal 2015. Gross profit was 34.2 percent of Net sales for the first quarter of fiscal 2016, up approximately 50 basis points from 33.7 percent of Net sales for first quarter of fiscal of 2015.

Operating income increased $22 million, or 14.1 percent, to $178 million for the first quarter of fiscal 2016 as compared to $156 million for the first quarter of fiscal 2015. Operating income as a percentage of Net sales was 10.0 percent for the first quarter of fiscal 2016, up approximately 60 basis points from 9.4 percent for the first quarter of fiscal 2015.

Net income decreased $256 million to a Net loss of $14 million for the first quarter of fiscal 2016 as compared to $242 million Net income for the first quarter of fiscal 2015. The decrease in Net income (loss) was due to a $115 million loss incurred as a result of the extinguishment of outstanding debt in the first quarter of fiscal 2016 and a $189 million tax benefit in the first quarter of fiscal 2015 as a result of IRS and state audit settlements.  Net loss per diluted share was $0.07 for the first quarter of fiscal 2016, as compared to a Net income per diluted share of $1.21 for the first quarter of fiscal 2015.

Adjusted EBITDA increased $26 million, or 13.8 percent, to $215 million for the first quarter of fiscal 2016 as compared to $189 million for the first quarter of fiscal 2015. Adjusted EBITDA as a percentage of Net sales was 12.1 percent for the first quarter of fiscal 2016, up approximately 70 basis points from 11.4 percent for the first quarter of fiscal 2015.

Adjusted net income increased $52 million to $103 million for the first quarter of fiscal 2016 as compared to $51 million for the first quarter of fiscal 2015.  Adjusted net income per diluted share was $0.51 for the first quarter of fiscal 2016, as compared to $0.25 for the first quarter of fiscal 2015.

As of May 1, 2016, HD Supply’s combined liquidity of approximately $1,268 million was comprised of $203 million in cash and cash equivalents and $1,065 million of additional available borrowings under HD Supply, Inc.’s senior asset-backed lending facility, based on qualifying inventory and receivables.

HD Supply Holdings, Inc. earnings per share showed an increasing trend of 56.3% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 322%.Analysts project EPS growth over the next 5 years at 34.54%. It has EPS annual growth over the past 5 fiscal years of 27.7% when sales grew 2.8. It reported 7.3% sales growth, and -106% EPS decline in the last quarter.

The stock is trading at $35.27, up 65.9% from 52-week low of $21.26. The stock trades down -4.18% from its peak of $36.81 and % below the consensus price target of $40.46. Its volume clocked up at 1.84 million shares which is higher than the average volume of 1.78 million shares. Its market capitalization currently stands at $7.01B.

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