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The Home Depot Inc HD

Morningstar Rating
$323.50 −0.52 (0.16%)
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Company Report

Slower Demand Fails to Derail Solid Profitability at Home Depot

Home Depot is the world's largest home improvement retailer, set to deliver an estimated $153 billion in revenue in 2023. The firm earns a wide economic moat rating due to its economies of scale and brand equity. While Home Depot has realized strong historical returns as a result of its scale, operational excellence and concise merchandising remain key tenets underlying our modest margin expansion forecast. Its flexible distribution network should help elevate the firm's brand intangible asset, with faster time to delivery improving the do-it-yourself (DIY) experience and market delivery centers catering to the pro business. The success of ongoing initiatives should allow for modest operating margin expansion above prepandemic levels in the longer term, despite near-term inflationary pressures and economic turbulence.

Price vs Fair Value

HD is trading at a 23% premium.
Price
$323.49
Fair Value
$976.00
Uncertainty
Medium
1-Star Price
$476.78
5-Star Price
$586.80
Economic Moat
Dyk
Capital Allocation
Fgrdvhlt

Bulls Say, Bears Say

Bulls

Home Depot's continued investments in supply chain and merchandising should improve productivity and support its market leadership position in the home improvement market.

Bears

Weak consumer spending, higher interest rates, or an economic downturn could hinder sales for home improvement projects and affect Home Depot's growth.

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News

Trading Information

Previous Close Price
$324.02
Day Range
$320.01323.92
52-Week Range
$274.26347.25
Bid/Ask
$312.63 / $329.29
Market Cap
$321.97 Bil
Volume/Avg
59 / 3.0 Mil

Key Statistics

Price/Earnings (Normalized)
20.76
Price/Sales
2.12
Dividend Yield
2.58%
Dividend Yield (Forward)
2.58%
Total Yield
4.98%

Company Profile

Home Depot is the world's largest home improvement specialty retailer, operating more than 2,300 warehouse-format stores offering more than 30,000 products in store and 1 million products online in the United States, Canada, and Mexico. Its stores offer numerous building materials, home improvement products, lawn and garden products, and decor products and provide various services, including home improvement installation services and tool and equipment rentals. The acquisition of distributor Interline Brands in 2015 allowed Home Depot to enter the maintenance, repair, and operations business, which has been expanded through the tie-up with HD Supply (2020). Moreover, the additions of the Company Store brought textile exposure to the lineup, while Redi Carpet added multifamily flooring.
Sector
Consumer Cyclical
Industry
Home Improvement Retail
Stock Style Box
Large Core
Total Number of Employees
471,600

Competitors

Valuation

Metric
HD
LOW
TGT
Price/Earnings (Normalized)
20.7615.2216.95
Price/Book Value
225.324.90
Price/Sales
2.121.350.58
Price/Cash Flow
16.6311.428.74
Price/Earnings
HD
LOW
TGT

Financial Strength

Metric
HD
LOW
TGT
Quick Ratio
0.250.070.09
Current Ratio
1.301.210.86
Interest Coverage
11.857.999.69
Quick Ratio
HD
LOW
TGT

Profitability

Metric
HD
LOW
TGT
Return on Assets (Normalized)
20.95%18.17%7.04%
Return on Equity (Normalized)
1,335.72%32.61%
Return on Invested Capital (Normalized)
34.03%36.37%13.79%
Return on Assets
HD
LOW
TGT

Home Improvement Retail Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Economic Moat
Market Cap
LOW
Lowe's Companies IncHcmm$118.4 Bil
WFAFY
Wesfarmers Ltd ADRTzbxn$39.4 Bil
WFAFF
Wesfarmers LtdHnklfdb$39.4 Bil
FND
Floor & Decor Holdings Inc Class AKwrxy$10.4 Bil
KGFHF
Kingfisher PLCCqnt$5.3 Bil
KGFHY
Kingfisher PLC ADRQkjrf$5.3 Bil
HPCRF
Home Product Center PCL Shs Foreign registeredLlmmm$4.4 Bil
FKRAF
Fiskars OyjDmq$1.5 Bil
ARHS
Arhaus Inc Class ASrtf$1.3 Bil