Home Depot store
A sign is posted in front of a Home Depot store in El Cerrito, California. Justin Sullivan/Getty Images

Leading home improvement retailer Home Depot reported its fiscal first-quarter earnings on Tuesday and surpassed analysts’ expectations.

Home Depot’s sales surged in the first quarter of the fiscal boosted by a higher number of transactions and heightened spending on each visit.

The company was able to exceed Wall Street's expectations in EPS and revenue. But same-store sales fell below expectations. The first quarter net income jumped to $2.5 billion ($2.27 per share) up from $2.4 billion or $2.08, a year ago.

Analysts were predicting the company would earn $2.18 per share. Revenue grew 5.7 percent to $26.381 billion above the consensus estimate of $26.378 billion by Refinitiv.

Same-store sale dip linked to the calendar shift

But the dampener was the same-store sale. The same-store sale is a key metric in assessing a retailer’s success. In Home Depot’s Q1, it rose just 2.5 percent and trailed the target of 4.3 percent set by analysts for Q1.

However, the company defended the drag to a calendar shift. According to Home Depot, in 2018 estimates, 53 weeks were considered for accounting. But this year only 52 weeks were taken into account.

“We were pleased with the underlying performance of the core business despite unfavorable weather in February and significant deflation in lumber prices compared to a year ago,” said Craig Menear, Home Depot's CEO, and president.

During the quarter, customer transactions grew 3.8 percent, the average shopper’s ticket increased 2 percent and sales per square foot jumped 5.6 percent. The shares of Home Depot jumped 0.9 percent in pre-market after the Q1 report came out.

Guidance for 2019

The company reiterated its guidance for fiscal 2019 that earnings will rise 3.1 percent to $10.03 per share. Same-store sales will to grow 5 percent with revenue growth at 3.3 percent.

Home Depot reported $108.2 billion in total revenues in fiscal 2018. The company's revenue flows from the sale of home improvement items such as tools, construction products, and related services.

According to analysts, both Home Depot and rival Lowe is well positioned for growth in the current environment.

Note by Brian Nagel of Oppenheimer said falling mortgage rates could strengthen key housing metrics and undo the “still negative market narrative weighing upon multiples within the space.”

Home Depot shares are up more than 11 percent since the start of this year.