Home Depot's Light 1st-Quarter Sales Not Troubling

With spring off to a late start, we weren’t surprised that wide-moat

Given the plan to spend double the amount ($11.1 billion between 2018 and 2020, versus $5.7 billion in a business as usual environment) on strategic initiatives (supply chain, stores, IT), levering expenses will remain difficult, leading to minimal operating expansion over this period (we forecast operating margin of 14.8% in 2020 versus 14.5% in 2017). While this provides significantly slower operating expansion than over the last five years, which averaged 80 basis points per year, we believe these investments are set to bolster the brand intangible asset and provide longer term opportunities for operating margin expansion with a more dynamic supply chain intact. Over the next decade we see operating margins climbing to 16%.

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