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

Let's talk about the popular The Home Depot, Inc. (NYSE:HD). The company's shares saw its share price hover around a small range of US$281 to US$302 over the last few weeks. But is this actually reflective of the share value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Home Depot’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Home Depot

What's The Opportunity In Home Depot?

According to my valuation model, Home Depot seems to be fairly priced at around 17.34% above my intrinsic value, which means if you buy Home Depot today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $257.13, 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 kind of growth will Home Depot generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of Home Depot, it is expected to deliver a negative earnings growth of -1.3%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What This Means For You

Are you a shareholder? Currently, HD appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on HD for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on HD should the price fluctuate below its true value.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. At Simply Wall St, we found 1 warning sign for Home Depot and we think they deserve your attention.

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.