Home Depot forecasts poor 2019 earnings as U.S. housing momentum slows

A Home Depot store is seen in Long Beach, California, U.S., September 8, 2016. REUTERS/Lucy Nicholson

(Reuters) – Home Depot Inc projected 2019 earnings below Wall Street forecasts on Tuesday, as rising U.S. home prices discourage many Americans from buying new houses.

Shares of the largest U.S. home improvement retailer fell 2.6 percent to $183.75 in early trade after its fourth-quarter results showed the company had also missed estimates for same-store sales.

U.S. home sales fell to their lowest in more than three years, last month’s data showed, suggesting a further loss of momentum in the housing market, leading to tight inventory and more expensive homes.

For 2019, the company expects earnings of $10.03 per share, 23 cents less than analysts’ forecasts.

Sales at U.S. Home Depot outlets open at least 52 weeks rose 3.7 percent in the fourth quarter ended Feb. 3, below analysts’ average forecast of a 4.5 percent increase, according to IBES data from Refinitiv.

Quarterly net earnings rose to $2.34 billion from $1.78 billion a year earlier, while net sales climbed 11 percent to $26.49 billion, but missed estimates of $26.57 billion.

The company also announced $15 billion in share buybacks and a 32 percent increase to its quarterly dividend to $1.36 per share.

Reporting by Nivedita Balu in Bengaluru; Editing by Sai Sachin Ravikumar

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