Is It Time To Consider Buying The Home Depot, Inc. (NYSE:HD)?

Today we're going to take a look at the well-established The Home Depot, Inc. (NYSE:HD). The company's stock saw a decent share price growth in the teens level on the NYSE over the last few months. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on Home Depot’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Home Depot

What Is Home Depot Worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 13.15% above my intrinsic value, which means if you buy Home Depot today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $283.92, there’s only an insignificant downside when the price falls to its real value. Furthermore, Home Depot’s low beta implies that the stock is less volatile than the wider market.

What does the future of Home Depot look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a relatively muted profit growth of 4.8% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Home Depot, at least in the short term.

What This Means For You

Are you a shareholder? HD’s future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on HD, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. In terms of investment risks, we've identified 1 warning sign with Home Depot, and understanding it should be part of your investment process.

If you are no longer interested in Home Depot, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.