Home Depot (NYSE:HD) - Share price, News & Analysis

HD fundamental analysis
Snowflake Score
Valuation	4/6
Future Growth	2/6
Past Performance	3/6
Financial Health	2/6
Dividends	5/6

HD Stock Overview

The Home Depot, Inc. operates as a home improvement retailer.

Rewards

Trading at 25.9% below our estimate of its fair value

Earnings are forecast to grow 4.31% per year

Earnings have grown 14.1% per year over the past 5 years

Pays a reliable dividend of 2.69%

Risk Analysis

Has a high level of debt

Home Depot Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Home Depot
Historical stock prices
Current Share Price	US$283.00
52 Week High	US$420.61
52 Week Low	US$264.51
Beta	0.98
1 Month Change	-8.25%
3 Month Change	-9.95%
1 Year Change	-9.77%
3 Year Change	36.08%
5 Year Change	84.49%
Change since IPO	15,080.76%

Recent News & Updates

Jun 17

Adjustments To Home Depot's Compensation Targets May Suggest An Expected Slowdown

HD's 2022 proxy shows some notable changes around executive compensation targets. In 2021, the Board reduced the 3-year average operating profit target below the 1-year, implying an expectation of near-term profit contraction. This story has yet to play out. The board also reduced management's 3-year avg. ROIC target from 44.5% to 34%, company performance not seen since 2017. In late May '22, HD disclosed changes to their Management Incentive Plan that suggest increased levels of uncertainty around predicting company performance. The MIP changes give the comp. committee more time to set performance targets and may even allow them to lower targets if the business worsens unexpectedly.

Jun 09

I Built A List Of Growing Companies And Home Depot (NYSE:HD) Made The Cut

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to...

Jun 02

Home Depot: Strong Brand And A Heavyweight In Home Improvement

Home Depot has a wide moat as a global brand and industry leader. It maintains a competitive advantage, but might be vulnerable given an innovative catalyst, a weakening customer satisfaction rating, or a powerful opponent encroaching on their market. The company has a resilient business with a powerful history of performance. The current macro environment has potential risks directly affecting some of the key drivers of Home Depot, like the housing market, disposable income, inflation, and residential construction. The fair value price is $231, according to outlined assumptions.

Shareholder Returns

	HD	US Specialty Retail	US Market
7D	4.5%	6.3%	6.6%
1Y	-9.8%	-26.6%	-18.4%

Return vs Industry: HD exceeded the US Specialty Retail industry which returned -26.6% over the past year.

Return vs Market: HD exceeded the US Market which returned -18.4% over the past year.

Price Volatility

Is HD's price volatile compared to industry and market?
HD volatility
HD Average Weekly Movement	4.8%
Specialty Retail Industry Average Movement	8.9%
Market Average Movement	8.1%
10% most volatile stocks in US Market	16.6%
10% least volatile stocks in US Market	3.2%

Stable Share Price: HD is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: HD's weekly volatility (5%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1978	490,600	Ted Decker	https://www.homedepot.com

The Home Depot, Inc. operates as a home improvement retailer. It operates The Home Depot stores that sell various building materials, home improvement products, lawn and garden products, and décor products, as well as facilities maintenance, repair, and operations products The company also offers installation services for flooring, cabinets and cabinet makeovers, countertops, furnaces and central air systems, and windows. In addition, it provides tool and equipment rental services.

Home Depot Fundamentals Summary

How do Home Depot's earnings and revenue compare to its market cap?
HD fundamental statistics
Market Cap	US$290.85b
Earnings (TTM)	US$16.52b
Revenue (TTM)	US$152.57b

17.6x

P/E Ratio

1.9x

P/S Ratio

Is HD overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
HD income statement (TTM)
Revenue	US$152.57b
Cost of Revenue	US$101.33b
Gross Profit	US$51.24b
Other Expenses	US$34.72b
Earnings	US$16.52b

Last Reported Earnings

May 01, 2022

Next Earnings Date

Aug 16, 2022

Earnings per share (EPS)	16.07
Gross Margin	33.58%
Net Profit Margin	10.83%
Debt/Equity Ratio	-2,279.4%

How did HD perform over the long term?

See historical performance and comparison

Dividends

2.7%

Current Dividend Yield

45%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is HD undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

4/6

Valuation Score 4/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for HD?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for HD. This is calculated by dividing HD's market cap by their current preferred multiple.
What is HD's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$290.85b

HD key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	2.2x
Enterprise Value/EBITDA	12.8x
PEG Ratio	4.1x

Price to Earnings Ratio vs Peers

How does HD's PE Ratio compare to its peers?

HD PE Ratio vs Peers

The above table shows the PE ratio for HD vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	30.8x

Forward PE

Price-To-Earnings vs Peers: HD is good value based on its Price-To-Earnings Ratio (17.6x) compared to the peer average (30.8x).

Price to Earnings Ratio vs Industry

How does HD's PE Ratio compare vs other companies in the U.S. Specialty Retail Industry?

Price-To-Earnings vs Industry: HD is expensive based on its Price-To-Earnings Ratio (17.6x) compared to the US Specialty Retail industry average (6.4x)

Price to Earnings Ratio vs Fair Ratio

What is HD's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

HD PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	17.6x
Fair PE Ratio	21x

Price-To-Earnings vs Fair Ratio: HD is good value based on its Price-To-Earnings Ratio (17.6x) compared to the estimated Fair Price-To-Earnings Ratio (21x).

Share Price vs Fair Value

What is the Fair Price of HD when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: HD ($283) is trading below our estimate of fair value ($382.16)

Significantly Below Fair Value: HD is trading below fair value by more than 20%.

Price to Earnings Growth Ratio

PEG Ratio: HD is poor value based on its PEG Ratio (4.1x)

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Future Growth

How is Home Depot forecast to perform in the next 1 to 3 years based on estimates from 26 analysts?

Future Growth Score

2/6

Future Growth Score 2/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

4.3%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: HD's forecast earnings growth (4.3% per year) is above the savings rate (1.9%).

Earnings vs Market: HD's earnings (4.3% per year) are forecast to grow slower than the US market (13.9% per year).

High Growth Earnings: HD's earnings are forecast to grow, but not significantly.

Revenue vs Market: HD's revenue (3.2% per year) is forecast to grow slower than the US market (8.4% per year).

High Growth Revenue: HD's revenue (3.2% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: HD's Return on Equity is forecast to be very high in 3 years time (184.8%).

Discover growth companies

Past Performance

How has Home Depot performed over the past 5 years?

Past Performance Score

3/6

Past Performance Score 3/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

14.1%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: HD has high quality earnings.

Growing Profit Margin: HD's current net profit margins (10.8%) are higher than last year (10.4%).

Past Earnings Growth Analysis

Earnings Trend: HD's earnings have grown by 14.1% per year over the past 5 years.

Accelerating Growth: HD's earnings growth over the past year (12%) is below its 5-year average (14.1% per year).

Earnings vs Industry: HD earnings growth over the past year (12%) underperformed the Specialty Retail industry 40.3%.

Return on Equity

High ROE: HD's liabilities exceed its assets, so it is difficult to calculate its Return on Equity.

Discover strong past performing companies

Financial Health

How is Home Depot's financial position?

Financial Health Score

2/6

Financial Health Score 2/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: HD has negative shareholder equity, which is a more serious situation than short term assets not covering short term liabilities.

Long Term Liabilities: HD has negative shareholder equity, which is a more serious situation than short term assets not covering long term liabilities.

Debt to Equity History and Analysis

Debt Level: HD has negative shareholder equity, which is a more serious situation than a high debt level.

Reducing Debt: HD's has negative shareholder equity, so we do not need to check if its debt has reduced over time.

Debt Coverage: HD's debt is well covered by operating cash flow (36.1%).

Interest Coverage: HD's interest payments on its debt are well covered by EBIT (17.5x coverage).

Balance Sheet

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Dividend

What is Home Depot current dividend yield, its reliability and sustainability?

Dividend Score

5/6

Dividend Score 5/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

2.69%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: HD's dividend (2.69%) is higher than the bottom 25% of dividend payers in the US market (1.57%).

High Dividend: HD's dividend (2.69%) is low compared to the top 25% of dividend payers in the US market (4.24%).

Stability and Growth of Payments

Stable Dividend: HD's dividends per share have been stable in the past 10 years.

Growing Dividend: HD's dividend payments have increased over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: With its reasonably low payout ratio (44.9%), HD's dividend payments are well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its reasonable cash payout ratio (69.1%), HD's dividend payments are covered by cash flows.

Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

2.4yrs

Average management tenure

CEO

Ted Decker (58 yo)

1.67yrs

Tenure

US$8,154,153

Compensation

Mr. Edward P. Decker, also known as Ted, has been the President of The Home Depot, Inc. since October 5, 2020, and served as its Chief Operating Officer since October 2020 until February 2022 and has been...

CEO Compensation Analysis

Compensation vs Market: Ted's total compensation ($USD8.15M) is below average for companies of similar size in the US market ($USD13.44M).

Compensation vs Earnings: Ted's compensation has increased by more than 20% in the past year.

Leadership Team

Experienced Management: HD's management team is considered experienced (2.4 years average tenure).

Board Members

Experienced Board: HD's board of directors are considered experienced (7.3 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: HD insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/06/26 00:00
End of Day Share Price	2022/06/24 00:00
Earnings	2022/05/01
Annual Earnings	2022/01/30