NYSE:HD

Stock Analysis Report

Executive Summary

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

Rewards

Trading at 5.3% below its fair value

Earnings are forecast to grow 5.83% per year

Earnings have grown 13% per year over the past 5 years

Pays a high and reliable dividend of 2.22%

Risk Analysis

Has a high level of debt



Snowflake Analysis

Established dividend payer with questionable track record.


Similar Companies

Lumber Liquidators Holdings

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Share Price & News

How has Home Depot's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: HD has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

1.8%

HD

2.1%

US Specialty Retail

0.9%

US Market


1 Year Return

27.4%

HD

17.3%

US Specialty Retail

20.0%

US Market

Return vs Industry: HD exceeded the US Specialty Retail industry which returned 17.3% over the past year.

Return vs Market: HD exceeded the US Market which returned 20.1% over the past year.


Shareholder returns

HDIndustryMarket
7 Day1.8%2.1%0.9%
30 Day5.7%0.2%1.4%
90 Day8.5%4.7%8.8%
1 Year30.8%27.4%19.1%17.3%22.5%20.0%
3 Year84.1%71.4%44.9%37.9%49.9%40.3%
5 Year144.3%118.2%50.0%37.8%73.2%54.1%

Price Volatility Vs. Market

How volatile is Home Depot's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Home Depot undervalued compared to its fair value and its price relative to the market?

5.3%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: HD ($245.03) is trading below our estimate of fair value ($258.7)

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


Price To Earnings Ratio

PE vs Industry: HD is poor value based on its PE Ratio (24.3x) compared to the Specialty Retail industry average (16.7x).

PE vs Market: HD is poor value based on its PE Ratio (24.3x) compared to the US market (18.4x).


Price to Earnings Growth Ratio

PEG Ratio: HD is poor value based on its PEG Ratio (4.2x)


Price to Book Ratio

PB vs Industry: HD has negative assets, so we can't compare its PB Ratio to the US Specialty Retail industry average.


Next Steps

Future Growth

How is Home Depot forecast to perform in the next 1 to 3 years based on estimates from 27 analysts?

5.8%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: HD's forecast earnings growth (5.8% per year) is above the savings rate (1.7%).

Earnings vs Market: HD's earnings (5.8% per year) are forecast to grow slower than the US market (14.6% per year).

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

Revenue vs Market: HD's revenue (4% per year) is forecast to grow slower than the US market (7.6% per year).

High Growth Revenue: HD's revenue (4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if HD's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has Home Depot performed over the past 5 years?

13.0%

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%) are lower than last year (10%).


Past Earnings Growth Analysis

Earnings Trend: HD's earnings have grown by 13% per year over the past 5 years.

Accelerating Growth: HD's earnings growth over the past year (4.9%) is below its 5-year average (13% per year).

Earnings vs Industry: HD earnings growth over the past year (4.9%) underperformed the Specialty Retail industry 5.8%.


Return on Equity

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


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Home Depot's financial position?


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 (48.8%).

Interest Coverage: HD's interest payments on its debt are well covered by EBIT (14.8x coverage).


Balance Sheet

Inventory Level: HD has a high level of physical assets or inventory.

Debt Coverage by Assets: HD has negative shareholder equity (liabilities exceed assets) therefore debt is not covered by short term assets.


Next Steps

Dividend

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

2.22%

Current Dividend Yield


Dividend Yield vs Market

company2.2%marketbottom25%1.4%markettop25%3.7%industryaverage1.8%forecastin3Years2.5%

Current dividend yield vs market & industry

Notable Dividend: HD's dividend (2.22%) is higher than the bottom 25% of dividend payers in the US market (1.44%).

High Dividend: HD's dividend (2.22%) is low compared to the top 25% of dividend payers in the US market (3.69%).


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.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (53.9%), HD's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: HD's dividends in 3 years are forecast to be covered by earnings (60.3% payout ratio).


Next Steps

Management

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

8.3yrs

Average management tenure


CEO

Craig Menear (61yo)

5.3yrs

Tenure

US$11,366,662

Compensation

Mr. Craig A. Menear has been the Chief Executive Officer and President of Home Depot, Inc. since November 1, 2014 and its Chairman of the Board since February 2, 2015. Mr. Menear is the President and Direc ...


CEO Compensation Analysis

Compensation vs Market: Craig's total compensation ($USD11.37M) is about average for companies of similar size in the US market ($USD10.78M).

Compensation vs Earnings: Craig's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Craig Menear
Chairman5.3yrsUS$11.37m0.014% $37.6m
Matthew Carey
Executive VP & Chief Information Officer11.4yrsUS$3.88m0.0068% $18.2m
Mark Holifield
Executive VP of Supply Chain & Product Development13.6yrsUS$4.01m0.0024% $6.5m
Edward Decker
Executive Vice President of Merchandising13.3yrsUS$3.99m0.0058% $15.6m
Richard McPhail
CFO & Executive VP0.5yrsno data0.0017% $4.6m
Isabel Janci
VP of Investor Relations & Treasurer2yrsno datano data
Teresa Roseborough
Executive VP8.3yrsno data0.0012% $3.3m
Stephen Holmes
Vice President of Corporate Communications0yrsno datano data
Timothy Hourigan
Executive Vice President of Human Resources2.7yrsno data0.0047% $12.6m
William Lennie
Executive Vice President of Outside Sales & Service16.5yrsno data0.0031% $8.3m

8.3yrs

Average Tenure

61yo

Average Age

Experienced Management: HD's management team is seasoned and experienced (8.3 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Craig Menear
Chairman5.3yrsUS$11.37m0.014% $37.6m
Gerard Arpey
Independent Director4.5yrsUS$295.00k0.000090% $240.6k
Gregory Brenneman
Independent Lead Director5.8yrsUS$360.00k0.0058% $15.5m
Ari Bousbib
Independent Director12.3yrsUS$300.00k0.00092% $2.5m
Jeffery Boyd
Independent Director3.3yrsUS$295.00k0.00092% $2.5m
Albert Carey
Independent Director12yrsUS$300.00k0.00010% $267.3k
Helena Foulkes
Independent Director6.4yrsUS$295.00k0.000030% $80.2k
Wayne Hewett
Independent Director6.1yrsUS$292.50k0.00015% $400.9k
Linda Gooden
Independent Director4.3yrsUS$290.00k0.000030% $80.2k
Joseph Brown
Independent Director8.7yrsUS$315.00k0.000090% $240.6k

5.9yrs

Average Tenure

60.5yo

Average Age

Experienced Board: HD's board of directors are considered experienced (5.9 years average tenure).


Ownership

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


Insider Trading Volume

Insider Buying: HD insiders have only sold shares 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 company bio, 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
  • Market Cap: US$267.286b
  • Shares outstanding: 1.09b
  • Website: https://www.homedepot.com

Number of Employees


Location

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

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
HDNYSE (New York Stock Exchange)YesCommon StockUSUSDSep 1981
HD *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNSep 1981
HDIXTRA (XETRA Trading Platform)YesCommon StockDEEURSep 1981
HDIDB (Deutsche Boerse AG)YesCommon StockDEEURSep 1981
HDSNSE (Santiago Stock Exchange)YesCommon StockCLUSDSep 1981
HDSWX (SIX Swiss Exchange)YesCommon StockCHCHFSep 1981
HD-UETLX (Eurotlx)YesCommon StockITEURSep 1981
HDWBAG (Wiener Boerse AG)YesCommon StockATEURSep 1981
HDBASE (Buenos Aires Stock Exchange)CEDEAR EACH REPR 1/4 COM STK USD0.05ARARSSep 2001
HOME34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH REPR 0.5 COM USD0.05BRBRLAug 2012

Biography

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 provide installation, home maintenance, and professional service programs to do-it-yourself and professional customers. The company also offers installation programs that include flooring, cabinets and cabinet makeovers, countertops, furnaces and central air systems, and windows; and professional installation in various categories sold through its stores and in-home sales programs, as well as acts as a contractor to provide installation services to its do-it-for-me customers through third-party installers. In addition, it provides tool and equipment rental services. The company primarily serves home owners; and professional renovators/remodelers, general contractors, handymen, property managers, building service contractors, and specialty tradesmen, such as electricians, plumbers, and painters. It also sells its products online. As of February 3, 2019, the company operated 2,287 stores in the United States, including the Commonwealth of Puerto Rico, and the territories of the U.S. Virgin Islands and Guam; Canada; and Mexico. The Home Depot, Inc. was founded in 1978 and is based in Atlanta, Georgia. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/17 23:41
End of Day Share Price2020/02/14 00:00
Earnings2019/11/03
Annual Earnings2019/02/03


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.