Rising Homeowner Renovation Plans Might Change The Case For Investing In Home Depot (HD)

• Recent survey data shows that 59% of U.S. homeowners plan to embark on home improvement projects over the next year, with Home Depot remaining the preferred retailer for these renovations.
• This cautious but growing interest among homeowners signals a potential turning point for the home improvement sector, which could support demand for Home Depot’s products and services.
• We'll examine how renewed homeowner demand for renovations might update Home Depot's investment narrative and outlook for future growth.

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Home Depot Investment Narrative Recap

For Home Depot shareholders, the central thesis remains that ongoing investment in supply chain efficiency and tech-driven customer experiences can position the company to capitalize on any rebound in home improvement demand. The latest UBS survey shows that a majority of homeowners are planning projects, but the incremental lift suggested by this news is not likely to materially shift near-term performance, given that big-ticket renovations still face deferral amid economic uncertainty, keeping pressure on what is likely the most important short-term catalyst: a clear improvement in high-value project demand. The main risk, persistent softness in larger discretionary remodeling, remains present and is only modestly mitigated by these survey findings.

Among recent announcements, Home Depot reaffirmed its fiscal 2025 outlook for 2.8% total sales growth and a small 3% decline in diluted EPS, reflecting the cautious optimism seen in homeowner intent data while underscoring ongoing cost pressures. Dividend payouts remain steady, offering some reassurance for income-focused investors, though the earnings guidance highlights the thin margin for error if consumer enthusiasm fails to translate into larger transactions or sustained sales growth.

By contrast, investors should be aware that inventory levels remain elevated, raising the possibility that...

Read the full narrative on Home Depot (it's free!)

Home Depot's narrative projects $182.4 billion revenue and $17.4 billion earnings by 2028. This requires 3.4% yearly revenue growth and a $2.8 billion earnings increase from $14.6 billion.

Uncover how Home Depot's forecasts yield a $437.81 fair value, a 13% upside to its current price.

Exploring Other Perspectives

Seven individual fair value estimates from the Simply Wall St Community span a wide range, from US$296.82 to US$437.81 per share. With longer-term demand for big renovation projects still uncertain, readers may want to explore multiple viewpoints on Home Depot’s future performance.

Explore 7 other fair value estimates on Home Depot - why the stock might be worth 24% less than the current price!

Build Your Own Home Depot Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Home Depot research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.
• Our free Home Depot research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Home Depot's overall financial health at a glance.

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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.

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