Home Depot's profit, sales top estimates on higher traffic, spending

In this Wednesday, May 18, 2016, file photo, people approach an entrance to a Home Depot store in Bellingham, Mass.

(Reuters) - Home Depot Inc's profit beat market estimates for the sixth straight quarter on Tuesday as more shoppers visited the No.1 U.S. home improvement chain and spent more on average amid an improving housing market.

The company raised its quarterly dividend by 15.7 percent, which along with the strong results helped send its shares up 1.2 percent to $189.18 in trading before the bell.

The U.S. housing market has been on a winning streak, helped by rising employment and higher wages. That has encouraged homeowners to buy new homes or remodel their existing ones, both of which benefit chains such as Home Depot and Lowe's Cos Inc.

U.S. housing starts jumped 9.7 percent in January, to their highest level since October 2016, while homebuilding rose to more than a one-year high, according to data released by the Commerce Department last week.

Sales at Home Depot stores open for more than a year rose 7.5 percent in the latest fourth quarter ended Jan. 28, handily beating analysts average estimate of 6.5 percent, according to Thomson Reuters I/B/E/S.

Comparable sales at the company's U.S. stores increased 7.2 percent, also beating analysts estimates of 6.1 percent.

The number of customer transactions in the quarter rose 2 percent, while the average check increased 5.5 percent.

However, Home Depot's comparable store sales growth forecast of 5 percent for fiscal year 2018 was below analysts estimates of an increase of 5.4 percent.

Both the company's and analysts' estimates show that demand would taper compared with fiscal 2017, when Home Depot's comparable store sales increased 6.8 percent.

The company expects overall sales growth to slow to 6.5 percent in fiscal 2018, from an increase of 6.7 percent last year, while analysts were expecting a slowdown to about 6 percent.

In the latest fourth quarter, the retailer's net sales rose 7.5 percent to $23.88 billion, which beat analysts estimate of $23.66 billion.

Home Depot's net earnings rose 2 percent to $1.78 billion, $1.52 per share, though growth was curbed by a $127 million charge related to changes in the U.S. tax code.

Excluding one time items, the company earned $1.69 per share beating analysts' estimate of $1.61 per share.

Home Depot's shares have risen about 32 percent in the past 12 months, outpacing the roughly 26 percent increase in Lowe's and the 21 percent rise in the S&P 500 consumer discretionary index.

Lowe's is expected to report fourth quarter results on Feb. 28.

(Reporting by Aishwarya Venugopal in Bengaluru; Editing by Savio D'Souza)