Retail Relief as Home Depot Reports Solid Earnings

Earnings per share came in at $3.92, well above the $3.40 that analysts had predicted. The degree to which Home Depot beat earnings comes as a surprise and relief to markets that were waiting to see how inflationary pressures and supply chain issues had affected in-person retail sales at some of the major big box retail chains in the third quarter.

Home Depot reported that same-store sales hit 6.1% on an estimate of 2.2%, with same-store sales above $1,000 up 18% for the third quarter. Average ticket prices were up, with sales from novelty Halloween items and the increasing cost of copper and building materials contributing to higher consumer spending per visit.

With the housing market hitting strides and prices continuing to climb, the demand has increased for home professionals who are in turn buying more building materials. Executives at Home Depot had told analysts previously that these professionals still have backlogs of projects from supply chain shortages and COVID concerns that saw many homeowners not wanting to welcome outsiders into their homes.

As these concerns abate, projects that have been on hold are now being completed, and the home improvement retailer has indicated that it has already received almost all of its fourth quarter goods and isn’t concerned with shipping delays. With the holiday season on the horizon, sales for the first two weeks of the fourth quarter are already up compared to the third quarter, and Home Depot is anticipating a strong end of the year.

The American Century Sustainable Equity ETF (ESGA) invests in U.S. large-cap companies with large growth and value potential that rank highly on ESG metrics, such as Home Depot. The fund measures the ESG performance of a company, weighing environmental impact as one of the major factors for qualification. It goes a step beyond, though, and it also looks at the other aspects of ESG, such as turnover of employees and corporate leadership, to name just a few.

ACI’s proprietary model assigns a score to each security for financial metrics and a separate score for ESG metrics, then combines them for an overall score.

The highest-scoring securities are selected within each sector, creating a portfolio with strong performance and higher ESG ratings than the stocks in the S&P 500 Index.

The fund is a semi-transparent ETF, meaning that allocations are disclosed on a quarterly basis, not daily. As of its last disclosure, ESGA held companies like Alphabet (GOOGL), Home Depot (HD), and Microsoft (MSFT).

ESGA has a total annual fund operating expense of 0.39% and total assets of $160 million.

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