Home Depot (HD): a good stock to buy and hold?

5:31 pm ET, 10 Aug 2018

Home Depot (HD) shares are trading at $196.33. What news should investors be aware of when it comes to Home Depot?  What's HD stock price forecast?

Home Depot is the world's largest home improvement retailer, with over $100 billion in revenue. It benefits from a favorable housing market and improvements in its merchandising and distribution network.  Home Depot has produced strong historical returns as a result of its scale and distribution network (different channels of the organization). 

Home Depot is expected to drive top-line growth because of the integration of Interline Brands and penetration of adjacent customer product segments (such as commercial). The catalysts for EPS growth are the firm’s efficient supply chain and improved merchandising technology. 

Home Depot is growing both because of acquisitions (e.g., the Company Store) and organic business.  Appliances could grow as peers such as Sears close doors.  Also, the company is aggressively expanding into new categories.  Home Depot has made its distribution channel very efficient in recent years, helped by its rapid distribution centers. The commitment to better merchandising and cost controls has led the firm to achieve operating margins of 15%. 

What is the sentiment towards the HD stock? Our technical analysis shows that:

  • The stock short-term sentiment (next 30 days) is negative;
  • The mid-term sentiment (3-6 months) is trending positive;
  • The long-term sentiment (9-12 months) is positive. 

Home Depot (HD) forward P/E ratio is 19.4, and it’s high compared to its industry peers’ P/E ratios.

Home Depot (HD) average analyst price target ($209.17) is 18.67% above its current price ($176.26).

For the latest price and information on Home Depot, Inc. (The), please visit Finstead and search for "HD price" or "HD news".

Home Depot, Inc. (The) (HD) Stock Guide

Updated at: 3:39 am ET, 17 Sep 2020

Before we start: if you're looking for HD stock price, you can quickly find it out by visiting Finny and typing "HD quote". If you're looking for a quick scoop on HD stock (chart, price target, market cap, news and buy or sell analysis), go to Finny and look for "HD". You'll get all this info in one place. Or you can just type "HD news" to get the latest stock news.

Looking to buy or sell Home Depot, Inc. (The) (HD)? Interested in getting the full scoop on HD, including earnings and dividends, stock forecast, buy or sell analysis and key stats? If so, you came to the right place.

In this HD stock guide, we'll address key questions about HD, above and beyond what you can find on Yahoo Finance, Zacks, MarketWatch or Morningstar.

Here is what you'll be able to find in this guide:

Earnings and Dividends: earnings, earnings date, dividend rate and dividend yield;
Analysis: Finny Score and buy or sell analysis;
Key Stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio, industry, sector, and number of employees.

And here is the list of questions we'll answer:
1. What are HD earnings?
2. What is HD dividend?
3. What is HD dividend yield?
4. HD buy or sell? What is HD Finny Score?
5. What are the reasons to buy HD? Why should I buy HD stock?
6. What are the reasons to sell HD? Why should I sell HD stock?
7. What are HD key stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

So let's start. Scroll down to the question that interests you the most.

Earnings and Dividends

1. What are HD earnings?

HD trailing 12-month earnings per share (EPS) is $10.92.

2. What is HD dividend?

HD forward dividend is $6.00.

3. What is HD dividend yield?

HD forward dividend yield is 2.1%.

Analysis

4. HD buy or sell? What is HD Finny Score?

#{finnyScore:57}Our quantitative analysis shows 4 reasons to buy and 3 reasons to sell HD, resulting in Finny Score of 57.

5. What are the reasons to buy HD? Why should I buy HD stock?

Here are the reasons to buy HD stock:

  • Home Depot's revenue growth has been very solid. The company has a history of beating analysts' estimates.
  • The company has very solid free cash flows. Its return on invested capital (ROIC) of over 40% is excellent. It repurchased about $5.5 billion of shares at the end of the third quarter of 2018.
  • The addressable potential market for Home Depot is huge.
  • Home Depot has been constantly working on improving its supply chain management with an aim to deliver goods to customers within one to two days of an order in the US. For direct-to-consumers (DTC), the company has introduced a number of initiatives like Ship to Store, Buy Online, and Deliver from Store.
  • HD quarterly revenue growth was 23.40%, higher than the industry and sector average revenue growth (0.15% and 0.78%, respectively). See HD revenue growth chart.
  • HD profitability is improving. The YoY profit margin change was 0.14 percentage points. See HD profitability chart.
  • HD forward dividend yield is 2.10%, higher than the industry (1.02%) and sector (0.55%) forward dividend yields. See HD forward dividend chart.
  • HD cash to debt ratio is 0.35, higher than the average industry (0.26) and sector (0.13) cash to debt ratio. See HD cash to debt chart.

6. What are the reasons to sell HD? Why should I sell HD stock?

Let's look at the reasons to sell HD stock (i.e., the bear case):

  • Decelerating global growth might delay home-improvement projects and affect Home Depot's sales. Slowing US housing market is another cause of worry for investors.
  • IT and supply chain improvements face implementation risks, which could affect profit growth if peers surpass Home Depot’s capabilities.
  • Limited footprint growth domestically may drive increased competitive pricing pressures between Home Depot and Lowe's, constraining revenue and profit expansion.
  • The company is facing steep competition from Lowe's and other home supply retailers.
  • HD stock price ($286.27) is close to the 52-week high ($288.24). Perhaps now is a good time to sell? See HD price chart.
  • HD PEG ratio (P/E adjusted for growth) is 4.23, which is high compared to its industry peers’ PEG ratios. See HD PEG chart.
  • HD short interest (days to cover the shorts) ratio is 2.2. The stock garners more short interest than the average industry, sector or S&P 500 stock. See HD short interest ratio chart.

Key Stats

7. What are HD key stats : revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

Let's look at the key statistics for HD:

Metrics HD
Price $268.47
Average Price Target / Upside N/A
Average Analyst Rating N/A
Forward Dividend Yield 2.10%
Industry Home Improvement Stores
Sector Consumer Cyclical
Number of Employees 413,000
Market Cap $307.8B
Forward P/E Ratio 23.99
Price/Book Ratio 2.58
Revenue (TTM) $119.32B
YoY Quarterly Revenue Growth 23.40%
Profit Margin 9.91%

If you liked this analysis, check out Stock Guides for other stocks.

Follow Us