Bearish stock to watch: HD Supply Holdings Inc (NASDAQ: HDS)

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HD Supply Holdings Inc (NASDAQ: HDS) stock fell 5.81%  on June 11th, 2019 and continued its bearish momentum even on 12th June, 2019 (as of 11:00 am GMT-4; Source: Google finance) falling over 0.05%. The company posted better than expected results for the first quarter of FY 19 but lowered its full-year outlook. Net income for the quarter rose to $102 million from $90 million in the same period a year ago. in the last 12 months, HDS had generated $540 million of free cash flow. HDS had invested $26 million in capital expenditures in the first quarter of 2019, in line with the ongoing annual capital expenditures of approximately 2% of annual sales. As of the end of the first quarter of 2019, the net debt-to-adjusted EBITDA leverage was 2.4 times, comfortably within the targeted range of 2 times to 3 times.

Bearish stock to watch: HD Supply Holdings Inc (NASDAQ: HDS)

HDS in the first quarter of FY 19 has reported the adjusted earnings per share of 84 cents, beating the analysts’ estimates for the adjusted earnings per share of 81 cents, according to the FactSet consensus. The company had reported the adjusted revenue growth of 7.5 percent to $1.49 billion in the first quarter of FY 19, which is in line with the analysts’ estimates for revenue of $1.49 billion. Facilities maintenance sales grew 6.8% to $772 million, beating the FactSet consensus of $761 million, while construction and industrial sales rose 8.3% to $721 million but missed expectations of $730 million. The company said it saw weakness in facilities sales in May, as unusually cool weather hurt HVAC sales and a temporary disruption in order fulfillment because of a vendor software issue.

Moreover, organic sales in the first quarter has increased 5.8% over the first quarter of 2018. The gross margin rate of 39.2% was down 50 basis points from the first quarter of 2018. Adjusted EBITDA for the first quarter of 2019 was $203 million, up $13 million or 6.8%.

For fiscal 2019, the company lowered its adjusted EPS guidance range to $3.52 to $3.70 from $3.52 to $3.81 and its sales range to $6.25 billion to $6.35 billion from $6.30 billion to $6.45 billion. The company expect full year 2019 cash flow generation of around $525 million to $550 million, inclusive of an increase in cash taxes later in the year as we exhaust our net operating loss carry forwards and become a regular tax payer. The company expects adjusted EBITDA to be in the range of $890 million to $930 million.

 

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