Earnings preview: HD Supply likely to deliver upbeat Q2 results

HD Supply Holdings (HDS) is scheduled to report its second-quarter earnings on Wednesday before the market opens. Analysts expect the industrial distributor’s earnings and revenue to exceed their expectations.

Analysts, on average, expect the company to post earnings of $0.96 per share for the second quarter compared to the profit of $0.64 per share in the previous year quarter. Revenue is predicted to increase by 16.8% to $1.58 billion. Most of the analysts are recommending a “hold” rating with an average price target of $48.55.

The company had posted successive earnings surprise in three of the past four quarters. Investors are looking forward to a profit surprise in the second quarter with analysts expecting a 50% year-over-year growth. Growth estimates are likely to rise by 41.1% per annum in the current year and 0.3% in the next year.

During the recently completed first-quarter, higher sales and organic sales growth of 9.9% drove the bottom line higher by 4.7%. The top line rose by 14.2% helped by the return from the company’s growth investments. Sales from Facilities Maintenance rose 6% and that from Construction & Industrial jumped 24.3%.

For full-year 2018, the company had predicted adjusted earnings in the range of $3.11 to $3.27 per share and net sales in the range of $5.82 billion to $5.94 billion. Adjusted EBITDA is estimated to be in the range of $832 million to $862 million.

Investors expect the company’s Q2 bottom line to be benefited by higher sales from Construction & Industrial segment. Traders are predicting HD Supply to upgrade its full-year guidance. Zacks Equity Research believes that the industrial distributor appears as a compelling earnings-beat candidate.

Shares of HD Supply opened lower and dropped down by 1.25% to $45.02 when the Tuesday’s session ended as investors were cautious ahead of the earnings release. The stock had risen more than 12% so far this year and about 37% in the past one year.