HOME DEPOT INC (HD) Stock Fundamental Analysis
NYSE:HD - New York Stock Exchange, Inc. - US4370761029 - Common Stock - Currency: USD
Taking everything into account, HD scores 5 out of 10 in our fundamental rating. HD was compared to 121 industry peers in the Specialty Retail industry. While HD has a great profitability rating, there are some minor concerns on its financial health. HD is valued correctly, but it does not seem to be growing.
1. Profitability
1.1 Basic Checks
HD had positive earnings in the past year.
HD had a positive operating cash flow in the past year.
In the past 5 years HD has always been profitable.
Each year in the past 5 years HD had a positive operating cash flow.
1.2 Ratios
HD's Return On Assets of 14.76% is amongst the best of the industry. HD outperforms 90.08% of its industry peers.
The Return On Equity of HD (184.02%) is better than 100.00% of its industry peers.
HD's Return On Invested Capital of 24.31% is amongst the best of the industry. HD outperforms 90.91% of its industry peers.
The Average Return On Invested Capital over the past 3 years for HD is significantly above the industry average of 12.74%.
The last Return On Invested Capital (24.31%) for HD is well below the 3 year average (29.60%), which needs to be investigated, but indicates that HD had better years and this may not be a problem.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 14.76% | ||
| ROE | 184.02% | ||
| ROIC | 24.31% |
ROA(3y)19.19%
ROA(5y)19.73%
ROE(3y)922.84%
ROE(5y)N/A
ROIC(3y)29.6%
ROIC(5y)32.3%
1.3 Margins
With an excellent Profit Margin value of 8.98%, HD belongs to the best of the industry, outperforming 87.60% of the companies in the same industry.
In the last couple of years the Profit Margin of HD has declined.
HD has a Operating Margin of 13.24%. This is amongst the best in the industry. HD outperforms 89.26% of its industry peers.
In the last couple of years the Operating Margin of HD has remained more or less at the same level.
Looking at the Gross Margin, with a value of 33.34%, HD is in line with its industry, outperforming 40.50% of the companies in the same industry.
In the last couple of years the Gross Margin of HD has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 13.24% | ||
| PM (TTM) | 8.98% | ||
| GM | 33.34% |
OM growth 3Y-4.34%
OM growth 5Y-1.25%
PM growth 3Y-5.13%
PM growth 5Y-1.87%
GM growth 3Y-0.21%
GM growth 5Y-0.39%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so HD is creating value.
Compared to 1 year ago, HD has about the same amount of shares outstanding.
HD has less shares outstanding than it did 5 years ago.
HD has a better debt/assets ratio than last year.
2.2 Solvency
The Debt to FCF ratio of HD is 3.44, which is a good value as it means it would take HD, 3.44 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 3.44, HD is in the better half of the industry, outperforming 68.59% of the companies in the same industry.
A Debt/Equity ratio of 5.96 is on the high side and indicates that HD has dependencies on debt financing.
HD has a Debt to Equity ratio of 5.96. This is amonst the worse of the industry: HD underperforms 80.99% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 5.96 | ||
| Debt/FCF | 3.44 | ||
| Altman-Z | N/A |
ROIC/WACC2.53
WACC9.62%
2.3 Liquidity
HD has a Current Ratio of 1.09. This is a normal value and indicates that HD is financially healthy and should not expect problems in meeting its short term obligations.
With a Current ratio value of 1.09, HD is not doing good in the industry: 70.25% of the companies in the same industry are doing better.
HD has a Quick Ratio of 1.09. This is a bad value and indicates that HD is not financially healthy enough and could expect problems in meeting its short term obligations.
HD has a Quick ratio of 0.28. This is in the lower half of the industry: HD underperforms 79.34% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.09 | ||
| Quick Ratio | 0.28 |
3. Growth
3.1 Past
The earnings per share for HD have decreased by -0.40% in the last year.
HD shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 7.80% yearly.
HD shows a small growth in Revenue. In the last year, the Revenue has grown by 7.33%.
The Revenue has been growing slightly by 7.67% on average over the past years.
EPS 1Y (TTM)-0.4%
EPS 3Y-1.31%
EPS 5Y7.8%
EPS Q2Q%-1.93%
Revenue 1Y (TTM)7.33%
Revenue growth 3Y1.81%
Revenue growth 5Y7.67%
Sales Q2Q%9.44%
3.2 Future
HD is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 8.78% yearly.
Based on estimates for the next years, HD will show a small growth in Revenue. The Revenue will grow by 3.86% on average per year.
EPS Next Y3.46%
EPS Next 2Y6.29%
EPS Next 3Y6.92%
EPS Next 5Y8.78%
Revenue Next Year3.32%
Revenue Next 2Y3.72%
Revenue Next 3Y3.82%
Revenue Next 5Y3.86%
3.3 Evolution
The EPS growth rate is stable: in the next years the growth will be about the same than in the last years.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
HD is valuated rather expensively with a Price/Earnings ratio of 24.66.
Compared to the rest of the industry, the Price/Earnings ratio of HD indicates a somewhat cheap valuation: HD is cheaper than 60.33% of the companies listed in the same industry.
HD is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 25.91, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 21.72 indicates a rather expensive valuation of HD.
The rest of the industry has a similar Price/Forward Earnings ratio as HD.
HD is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 21.85, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 24.66 | ||
| Fwd PE | 21.72 |
4.2 Price Multiples
HD's Enterprise Value to EBITDA ratio is in line with the industry average.
Based on the Price/Free Cash Flow ratio, HD is valued a bit cheaper than the industry average as 62.81% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 23.95 | ||
| EV/EBITDA | 16.27 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates HD does not grow enough to justify the current Price/Earnings ratio.
The excellent profitability rating of HD may justify a higher PE ratio.
PEG (NY)7.12
PEG (5Y)3.16
EPS Next 2Y6.29%
EPS Next 3Y6.92%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.48%, HD has a reasonable but not impressive dividend return.
HD's Dividend Yield is rather good when compared to the industry average which is at 5.14. HD pays more dividend than 83.47% of the companies in the same industry.
HD's Dividend Yield is comparable with the S&P500 average which is at 2.36.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.48% |
5.2 History
On average, the dividend of HD grows each year by 10.50%, which is quite nice.
HD has paid a dividend for at least 10 years, which is a reliable track record.
HD has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)10.5%
Div Incr Years15
Div Non Decr Years34
5.3 Sustainability
HD pays out 61.38% of its income as dividend. This is not a sustainable payout ratio.
The dividend of HD is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP61.38%
EPS Next 2Y6.29%
EPS Next 3Y6.92%
366.13
-4.71 (-1.27%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Discretionary Distribution & Retail
GICS IndustrySpecialty Retail
Earnings (Last)
Earnings (Next)
Inst Owners72.73%
Inst Owner Change3.9%
Ins Owners0.04%
Ins Owner Change1.2%
Market Cap363.91B
Analysts78.8
Price Target431.17 (17.76%)
Short Float %0.96%
Short Ratio2.51
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.48% |
Yearly Dividend8.99
Dividend Growth(5Y)10.5%
DP61.38%
Div Incr Years15
Div Non Decr Years34
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-3.21%
Min EPS beat(2)-3.87%
Max EPS beat(2)-2.55%
EPS beat(4)0
Avg EPS beat(4)-2.29%
Min EPS beat(4)-3.87%
Max EPS beat(4)-0.62%
EPS beat(8)1
Avg EPS beat(8)-1.55%
EPS beat(12)1
Avg EPS beat(12)-1.48%
EPS beat(16)3
Avg EPS beat(16)-0.05%
Revenue beat(2)0
Avg Revenue beat(2)-1.56%
Min Revenue beat(2)-1.56%
Max Revenue beat(2)-1.55%
Revenue beat(4)0
Avg Revenue beat(4)-1.62%
Min Revenue beat(4)-2.66%
Max Revenue beat(4)-0.7%
Revenue beat(8)0
Avg Revenue beat(8)-2.06%
Revenue beat(12)0
Avg Revenue beat(12)-2.32%
Revenue beat(16)2
Avg Revenue beat(16)-1.6%
PT rev (1m)-1.39%
PT rev (3m)-2.97%
EPS NQ rev (1m)-0.4%
EPS NQ rev (3m)-1.55%
EPS NY rev (1m)-0.36%
EPS NY rev (3m)-3.67%
Revenue NQ rev (1m)-0.25%
Revenue NQ rev (3m)0.37%
Revenue NY rev (1m)-0.15%
Revenue NY rev (3m)0.14%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 24.66 | ||
| Fwd PE | 21.72 | ||
| P/S | 2.23 | ||
| P/FCF | 23.95 | ||
| P/OCF | 19.53 | ||
| P/B | 45.75 | ||
| P/tB | N/A | ||
| EV/EBITDA | 16.27 |
EPS(TTM)14.85
EY4.06%
EPS(NY)16.86
Fwd EY4.6%
FCF(TTM)15.29
FCFY4.18%
OCF(TTM)18.75
OCFY5.12%
SpS163.95
BVpS8
TBVpS-20.63
PEG (NY)7.12
PEG (5Y)3.16
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 14.76% | ||
| ROE | 184.02% | ||
| ROCE | 31.94% | ||
| ROIC | 24.31% | ||
| ROICexc | 24.81% | ||
| ROICexgc | 43.5% | ||
| OM | 13.24% | ||
| PM (TTM) | 8.98% | ||
| GM | 33.34% | ||
| FCFM | 9.32% |
ROA(3y)19.19%
ROA(5y)19.73%
ROE(3y)922.84%
ROE(5y)N/A
ROIC(3y)29.6%
ROIC(5y)32.3%
ROICexc(3y)31.18%
ROICexc(5y)34.99%
ROICexgc(3y)44.07%
ROICexgc(5y)47.45%
ROCE(3y)38.92%
ROCE(5y)42.7%
ROICexcg growth 3Y-8.8%
ROICexcg growth 5Y1.22%
ROICexc growth 3Y-16.36%
ROICexc growth 5Y-8.21%
OM growth 3Y-4.34%
OM growth 5Y-1.25%
PM growth 3Y-5.13%
PM growth 5Y-1.87%
GM growth 3Y-0.21%
GM growth 5Y-0.39%
F-Score4
Asset Turnover1.64
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 5.96 | ||
| Debt/FCF | 3.44 | ||
| Debt/EBITDA | 1.86 | ||
| Cap/Depr | 87.9% | ||
| Cap/Sales | 2.11% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 73.1% | ||
| Profit Quality | 103.79% | ||
| Current Ratio | 1.09 | ||
| Quick Ratio | 0.28 | ||
| Altman-Z | N/A |
F-Score4
WACC9.62%
ROIC/WACC2.53
Cap/Depr(3y)98.95%
Cap/Depr(5y)96.86%
Cap/Sales(3y)2.09%
Cap/Sales(5y)1.97%
Profit Quality(3y)98.66%
Profit Quality(5y)101.7%
High Growth Momentum
Growth
EPS 1Y (TTM)-0.4%
EPS 3Y-1.31%
EPS 5Y7.8%
EPS Q2Q%-1.93%
EPS Next Y3.46%
EPS Next 2Y6.29%
EPS Next 3Y6.92%
EPS Next 5Y8.78%
Revenue 1Y (TTM)7.33%
Revenue growth 3Y1.81%
Revenue growth 5Y7.67%
Sales Q2Q%9.44%
Revenue Next Year3.32%
Revenue Next 2Y3.72%
Revenue Next 3Y3.82%
Revenue Next 5Y3.86%
EBIT growth 1Y1.71%
EBIT growth 3Y-2.61%
EBIT growth 5Y6.32%
EBIT Next Year16.46%
EBIT Next 3Y9.88%
EBIT Next 5Y6.61%
FCF growth 1Y15.81%
FCF growth 3Y5.24%
FCF growth 5Y8.2%
OCF growth 1Y13.37%
OCF growth 3Y6.13%
OCF growth 5Y7.68%