Morningstar Rating
Stock XNYS Rating as of
$346.64 −1.98(0.57%)
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Company Report
Company Report
Home Depot: Raising Our Fair Value Estimate to $270 After Adding SRS Acquisition to Our Outlook
Jaime M Katz
We are raising our fair value estimate per share for wide-moat Home Depot to $270 from $265 after adding our forecast for SRS into our discounted cash flow model. While Home Depot has yet to update its full-year outlook, we are raising our 2024 sales outlook by roughly $9 billion and our EBITDA by around $500 million, as we expect a roughly 80% contribution in the second quarter and full contributions from SRS in the back half of fiscal 2024 with corresponding integration and transaction expenses. Recall, in 2023, SRS delivered $10 billion in sales and $1.1 billion in EBITDA, indicating an 11% EBITDA margin, which was moderately below Home Depot’s 16% enterprise level EBITDA margin. We’ve added the $18.25 billion purchase price and $10 billion in debt to finance the transaction into our model, which is set to increase debt service costs annually by around $500 million, given the roughly 5% interest rate across the nine pieces of debt issued to facilitate this deal.
Price vs Fair Value
Price vs Fair Value
HD is trading at a 633% premium.
Price
$348.64
Fair Value
$686.00
Uncertainty
Low
- 1-Star Price
- $868.50
- 5-Star Price
- $886.00
- Economic Moat
- Nbpr
- Capital Allocation
- Ffqztvjwq
Bulls Say, Bears Say
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
News
- Why U.S. stocks face a bumpy road to recovery with inflation and earnings updates on the horizon
- Earnings Watch: Walmart reports this week. Its 'resilience' will be tested amid signs of consumer slowdown, analyst says
- The Home Depot to Host Second Quarter Earnings Conference Call on August 13
- A Milestone of Care: The Home Depot’s Legacy of Support for Associates
- Active 2024 hurricane season helps Home Depot, Lowe's but hurts CarMax: analyst
- As Hurricane Beryl makes 'explosive start' to hurricane season, these disaster-recovery stocks are in the spotlight
- Home Depot on Pace for Largest Percent Decrease Since February 2023 — Data Talk
- The Home Depot Foundation Invests $9 Million To Provide Housing for More Than 3,400 Veterans Battling Homelessness
Trading Information
Trading Information
- Previous Close Price
- $348.62
- Day Range
$342.07–351.24
- 52-Week Range
$274.40–396.86
- Bid/Ask
- $346.61/$346.85
- Market Cap
- $343.73 Bil
- Volume/Avg
- 1.5 Mil/3.5 Mil
Key Statistics
Key Statistics
- Price/Earnings (Normalized)
- 22.38
- Price/Sales
- 2.29
- Dividend Yield (Trailing)
- 2.49%
- Dividend Yield (Forward)
- 2.58%
- Total Yield
- 4.04%
Company Profile
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 US, 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 Interline Brands in 2015 allowed Home Depot to enter the MRO business, which has been expanded through the tie-up with HD Supply (2020). The additions of the Company Store brought textiles to the lineup, and Redi Carpet added multifamily flooring, while the recent tie-up with SRS helps grow professional demand.
- Sector
- Consumer Cyclical
- Industry
- Home Improvement Retail
- Stock Style Box
- Large Core
- Total Number of Employees
- 471,600
- Website
- https://www.homedepot.com
Competitors
Competitors
- Tractor Supply Co TSCO
- Target Corp TGT
- Lowe's Companies Inc LOW
Valuation
Valuation
Metric | HD | TSCO | TGT |
---|---|---|---|
Price/Earnings (Normalized) | 22.38 | 26.06 | 15.21 |
Price/Book Value | 190.03 | 12.14 | 4.53 |
Price/Sales | 2.29 | 1.93 | 0.59 |
Price/Cash Flow | 18.49 | 18.91 | 8.25 |
Price/Earnings
HD
TSCO
TGT
Financial Strength
Financial Strength
Metric | HD | TSCO | TGT |
---|---|---|---|
Quick Ratio | 0.34 | 0.16 | 0.18 |
Current Ratio | 1.34 | 1.43 | 0.86 |
Interest Coverage | 10.86 | 33.33 | 12.52 |
Quick Ratio
HD
TSCO
TGT
Profitability
Profitability
Metric | HD | TSCO | TGT |
---|---|---|---|
Return on Assets (Normalized) | 19.73% | 12.04% | 7.99% |
Return on Equity (Normalized) | 1,265.26% | 52.26% | 34.30% |
Return on Invested Capital (Normalized) | 32.05% | 16.20% | 14.78% |
Return on Assets
HD
TSCO
TGT
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Home Improvement Retail Industry Comparables
Home Improvement Retail Industry Comparables
1-Day Chart | Name | Price | Morningstar Rating for Stocks | Capital Allocation | Economic Moat | Market Cap |
---|---|---|---|---|---|---|
Lowe's Companies Inc LOW | Qntzzffhmk | Lcy | $134.4 Bil | |||
Wesfarmers Ltd ADR WFAFY | — | Sbg | $53.1 Bil | |||
Wesfarmers Ltd WFAFF | — | Cxzn | $53.1 Bil | |||
FND | — | Jjbkcj | $10.7 Bil | |||
Kingfisher PLC KGFHF | — | Qfn | $6.3 Bil | |||
Kingfisher PLC ADR KGFHY | Svjrzdnf | Hmxmm | $6.3 Bil | |||
Home Product Center PCL Shs Foreign registered HPCRF | — | Pvqcc | $2.9 Bil | |||
Arhaus Inc Class A ARHS | — | Stncrky | $1.8 Bil | |||
Fiskars Oyj FKRAF | — | Qbpg | $1.4 Bil |