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HD

Home Depot NYSE:HD Stock Report

Last Price

US$309.69

Market Cap

US$318.3b

7D

2.9%

1Y

-6.1%

Updated

07 Aug, 2022

Data

Company Financials +
HD fundamental analysis
Snowflake Score
Valuation3/6
Future Growth2/6
Past Performance3/6
Financial Health2/6
Dividends5/6

HD Stock Overview

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

Home Depot Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Home Depot
Historical stock prices
Current Share PriceUS$309.69
52 Week HighUS$420.61
52 Week LowUS$264.51
Beta0.99
1 Month Change8.11%
3 Month Change4.26%
1 Year Change-6.11%
3 Year Change47.46%
5 Year Change99.96%
Change since IPO16,512.47%

Recent News & Updates

Jul 28
Should You Investigate The Home Depot, Inc. (NYSE:HD) At US$299?

Should You Investigate The Home Depot, Inc. (NYSE:HD) At US$299?

The Home Depot, Inc. ( NYSE:HD ) saw a decent share price growth in the teens level on the NYSE over the last few...

Jul 19

Ensemble Capital Management - Home Depot: Remodeling Boom

Home Depot's focus is on home remodeling, not housing transactions. We expect the remodel demand to remain solid. Our analysis indicates that the 50% of Home Depot revenue that comes from Do-It-Yourself homeowners has already fallen back to normalized levels. The following segment was excerpted from this fund letter. Home Depot (HD) Home Depot is a very different business from NVR and First American. Its focus is on home remodeling, not housing transactions. Historically, the level of interest rates has not had a material influence on demand for Home Depot’s products and services. With employment at very strong levels, households sitting on record levels of cash, home equity at all-time highs, and existing homeowners having locked in low, fixed mortgage payments during 2020-2021, we expect remodel demand to remain solid. Certainly, after the boom in remodeling over the past two years, Home Depot is likely to see growth decelerate, as was already expected coming in to 2022. And growth may be hard to find over the next year or two. But for homeowners who wish to move, but no longer can due to high interest rates on new mortgages, remodeling their existing home to better fit their needs is the next best option. Importantly, our analysis indicates that the 50% of Home Depot revenue that comes from Do-It-Yourself homeowners has already fallen back to normalized levels after surging dramatically in 2020 when people were stuck inside during COVID. The other 50% of revenue comes from professional contractors. This segment continues to boom, growing at an estimated 20% in the most recent quarter ending on April 30th. With homeowners desiring a remodel being forced to wait until 2023 due to extremely long backlogs of job activity, it appears very likely that strong remodeling activity will persist.

Jul 11
Is There An Opportunity With The Home Depot, Inc.'s (NYSE:HD) 27% Undervaluation?

Is There An Opportunity With The Home Depot, Inc.'s (NYSE:HD) 27% Undervaluation?

In this article we are going to estimate the intrinsic value of The Home Depot, Inc. ( NYSE:HD ) by taking the expected...

Jul 11

Home Depot's Stock Decline May Have Only Just Begun

Earnings estimates for Home Depot appear to be too high. Analysts see earnings growing much faster than revenue and operating profits. Someone is making a big bet that Home Depot's stock will see a big drop. This story was written on July 5 for subscribers of Reading The Markets. It has been updated as of the evening of July 10, where italicized along with the technical chart. Home Depot (HD) shares have plunged in 2022 due to soaring interest rates which have helped to slow the housing market. On top of that, higher inflation rates have eaten away at some of Home Depot's gross margins and made those margins much more volatile over the past year. Estimate Discrepancies Despite a weakening housing market and reported margin volatility, analysts' earnings estimates for Home Depot's fiscal 2023 and 2024 are holding up. Analysts are forecasting earnings for Home Depot to rise to $16.62 per share in 2023 and $17.59 in 2024. That is a growth rate of 7.02% in 2023 and 5.79% in 2024. Bloomberg Even sales estimates for Home Depot continue to rise. By 2023 analysts see sales reaching $156.79 billion and $161.76 billion in 2024. That would suggest that revenue in 2023 will grow by 3.73% and 3.17% in 2024. Bloomberg Meanwhile, analysts see gross margins staying around 33.6% in both 2023 and 2024. That is roughly flat to where gross margins had been in fiscal 2022 when they were at 33.62%. What is strange is that revenue growth is expected to be much slower than earnings growth, which would suggest analysts see margins expanding somewhere, and based on gross margins estimates, it isn't evident to be true. Bloomberg Operating profits are forecast to rise by 4.26% in 2023 to $24.02 billion and another 3.54% in 2024 to $24.87 billion. Again, this growth rate is expected to be faster than revenue growth in both years, pointing to operating margin expansion, suggesting that analysts see costs coming down somewhere. Bloomberg What is odd here is that earnings growth is still much higher than operating profit growth. That would suggest that analysts' earnings estimates are too high or that the company will be buying back enough stock in the coming two years to deliver earnings growth that exceeds revenue growth and operating profit growth. A Big Bet The Shares Fall The discrepancy in estimates is leading someone to make a very aggressive and bearish bet on Home Depot. On July 5, the open interest for the August 19, $210 puts, increased by roughly 22,300 contracts. The data shows that the put contracts were bought on the ASK for $1.34, implying Home Depot is trading at or below $208.66 by the expiration date. That would be a massive decline in Home Depot stock from its current price of about $277 on July 5. It is also a big wager with nearly $3 million premiums paid. The odds of the stock falling that sharply over the next month and a half seem really low. This bearish bet appears to be a cheap way for someone to get short the equity, with a minimal capital outlay. Technicals Point To Lower Prices From a technical standpoint, a decline below $210 doesn't seem likely, but a drop to around $245 does seem possible. That would take the stock back to its pre-pandemic highs. The equity recently fell below support at $285, and that price point has become a level of resistance. Given the sharp run higher in the stock starting in March 2021, Home Depot doesn't have much support until that $245 area on the technical chart.

Jun 28

The Odds Are Stacked Against Home Depot

Home Depot experienced major tailwinds from the pandemic. Now that the pandemic is fading, the tailwinds are leaving too. Uncertainties regarding future disposable income and a higher savings rate could cause a lower demand for Home Depot's products. The housing market is facing some issues and could cause Home Depot to sell less home renovation supplies.

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.

Shareholder Returns

HDUS Specialty RetailUS Market
7D2.9%3.9%1.0%
1Y-6.1%-30.9%-12.9%

Return vs Industry: HD exceeded the US Specialty Retail industry which returned -30.9% over the past year.

Return vs Market: HD exceeded the US Market which returned -12.9% over the past year.

Price Volatility

Is HD's price volatile compared to industry and market?
HD volatility
HD Average Weekly Movement3.9%
Specialty Retail Industry Average Movement8.8%
Market Average Movement7.9%
10% most volatile stocks in US Market17.1%
10% least volatile stocks in US Market3.2%

Stable Share Price: HD is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: HD's weekly volatility (4%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
1978490,600Ted Deckerhttps://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 CapUS$318.29b
Earnings (TTM)US$16.52b
Revenue (TTM)US$152.57b

19.3x

P/E Ratio

2.1x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
HD income statement (TTM)
RevenueUS$152.57b
Cost of RevenueUS$101.33b
Gross ProfitUS$51.24b
Other ExpensesUS$34.72b
EarningsUS$16.52b

Last Reported Earnings

May 01, 2022

Next Earnings Date

Aug 16, 2022

Earnings per share (EPS)16.07
Gross Margin33.58%
Net Profit Margin10.83%
Debt/Equity Ratio-2,279.4%

How did HD perform over the long term?

See historical performance and comparison

Dividends

2.5%

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

3/6

Valuation Score 3/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

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.

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/Revenue2.4x
Enterprise Value/EBITDA13.8x
PEG Ratio4.5x

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.
CompanyPEEstimated GrowthMarket Cap
Peer Average50.2x
FND Floor & Decor Holdings
35.5x20.4%US$9.9b
AMZN Amazon.com
123.6x52.8%US$1.4t
WMT Walmart
26.7x10.5%US$347.0b
LOW Lowe's Companies
15.1x4.3%US$127.2b
HD Home Depot
19.3x4.3%US$318.3b

Price-To-Earnings vs Peers: HD is good value based on its Price-To-Earnings Ratio (19.3x) compared to the peer average (50.2x).


Price to Earnings Ratio vs Industry

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

Price-To-Earnings vs Industry: HD is expensive based on its Price-To-Earnings Ratio (19.3x) 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 Ratio19.3x
Fair PE Ratio21.3x

Price-To-Earnings vs Fair Ratio: HD is good value based on its Price-To-Earnings Ratio (19.3x) compared to the estimated Fair Price-To-Earnings Ratio (21.3x).


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 ($309.69) is trading below our estimate of fair value ($383.8)

Significantly Below Fair Value: HD is trading below fair value, but not by a significant amount.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is less than 20% higher than the current share price.


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Future Growth

How is Home Depot forecast to perform in the next 1 to 3 years based on estimates from 28 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 (12.9% 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 (7.9% 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%).


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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 30.3%.


Return on Equity

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


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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

  • Cash Flow Coverage


2.45%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: HD's dividend (2.45%) is higher than the bottom 25% of dividend payers in the US market (1.52%).

High Dividend: HD's dividend (2.45%) is low compared to the top 25% of dividend payers in the US market (4.09%).


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.


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Management

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

2.5yrs

Average management tenure


CEO

Ted Decker (59 yo)

1.83yrs

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 ($USD8.15M) is below average for companies of similar size in the US market ($USD12.96M).

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 (2.5 years average tenure).


Board Members

Experienced Board: HD's board of directors are considered experienced (7.5 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.


Top Shareholders

Company Information

The Home Depot, Inc.'s employee growth, exchange listings and data sources


Key Information

  • Name: The Home Depot, Inc.
  • Ticker: HD
  • Exchange: NYSE
  • Founded: 1978
  • Industry: Home Improvement Retail
  • Sector: Retail
  • Implied Market Cap: US$318.285b
  • Shares outstanding: 1.03b
  • Website: https://www.homedepot.com

Number of Employees


Location

  • The Home Depot, Inc.
  • 2455 Paces Ferry Road
  • Atlanta
  • Georgia
  • 30339
  • United States

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/08/07 00:00
End of Day Share Price2022/08/05 00:00
Earnings2022/05/01
Annual Earnings2022/01/30


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.