HOME DEPOT INC (HD) Stock Fundamental Analysis
NYSE:HD - New York Stock Exchange, Inc. - US4370761029 - Common Stock - Currency: USD
HD gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 122 industry peers in the Specialty Retail industry. HD has an excellent profitability rating, but there are some minor concerns on its financial health. HD has a valuation in line with the averages, but on the other hand it scores bad on growth.
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.
HD had positive earnings in each of the past 5 years.
Each year in the past 5 years HD had a positive operating cash flow.
1.2 Ratios
HD has a Return On Assets of 14.76%. This is amongst the best in the industry. HD outperforms 89.34% of its industry peers.
The Return On Equity of HD (184.02%) is better than 100.00% of its industry peers.
Looking at the Return On Invested Capital, with a value of 24.31%, HD belongs to the top of the industry, outperforming 90.98% of the companies in the same industry.
HD had an Average Return On Invested Capital over the past 3 years of 29.60%. This is significantly above the industry average of 12.95%.
The 3 year average ROIC (29.60%) for HD is well above the current ROIC(24.31%). The reason for the recent decline needs to be investigated.
| 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
Looking at the Profit Margin, with a value of 8.98%, HD belongs to the top of the industry, outperforming 87.70% of the companies in the same industry.
In the last couple of years the Profit Margin of HD has declined.
HD's Operating Margin of 13.24% is amongst the best of the industry. HD outperforms 90.16% of its industry peers.
In the last couple of years the Operating Margin of HD has remained more or less at the same level.
The Gross Margin of HD (33.34%) is comparable to the rest of the 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.
HD has about the same amout of shares outstanding than it did 1 year ago.
HD has less shares outstanding than it did 5 years ago.
HD has a better debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 6.03 indicates that HD is not in any danger for bankruptcy at the moment.
HD's Altman-Z score of 6.03 is amongst the best of the industry. HD outperforms 91.80% of its industry peers.
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.
With a decent Debt to FCF ratio value of 3.44, HD is doing good in the industry, outperforming 72.13% of the companies in the same industry.
HD has a Debt/Equity ratio of 5.96. This is a high value indicating a heavy dependency on external financing.
Looking at the Debt to Equity ratio, with a value of 5.96, HD is doing worse than 80.33% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 5.96 | ||
| Debt/FCF | 3.44 | ||
| Altman-Z | 6.03 |
ROIC/WACC2.59
WACC9.37%
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.
HD's Current ratio of 1.09 is on the low side compared to the rest of the industry. HD is outperformed by 68.03% of its industry peers.
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.
The Quick ratio of HD (0.28) is worse than 77.05% 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.
Measured over the past 5 years, HD shows a small growth in Earnings Per Share. The EPS has been growing by 7.80% on average per year.
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
The Earnings Per Share is expected to grow by 6.66% on average over the next years.
HD is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 3.93% yearly.
EPS Next Y3.66%
EPS Next 2Y6.11%
EPS Next 3Y6.84%
EPS Next 5Y6.66%
Revenue Next Year3.51%
Revenue Next 2Y3.83%
Revenue Next 3Y3.94%
Revenue Next 5Y3.93%
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
Based on the Price/Earnings ratio of 24.20, the valuation of HD can be described as rather expensive.
HD's Price/Earnings ratio is a bit cheaper when compared to the industry. HD is cheaper than 63.11% of the companies in the same industry.
HD's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 27.50.
HD is valuated rather expensively with a Price/Forward Earnings ratio of 21.40.
The rest of the industry has a similar Price/Forward Earnings ratio as HD.
HD's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 36.44.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 24.2 | ||
| Fwd PE | 21.4 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of HD is on the same level as its industry peers.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of HD indicates a somewhat cheap valuation: HD is cheaper than 68.03% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 23.53 | ||
| EV/EBITDA | 16 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The excellent profitability rating of HD may justify a higher PE ratio.
PEG (NY)6.62
PEG (5Y)3.1
EPS Next 2Y6.11%
EPS Next 3Y6.84%
5. Dividend
5.1 Amount
HD has a Yearly Dividend Yield of 2.46%. Purely for dividend investing, there may be better candidates out there.
HD's Dividend Yield is rather good when compared to the industry average which is at 4.90. HD pays more dividend than 85.25% of the companies in the same industry.
HD's Dividend Yield is comparable with the S&P500 average which is at 2.35.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.46% |
5.2 History
On average, the dividend of HD grows each year by 10.50%, which is quite nice.
HD has been paying a dividend for at least 10 years, so it has a reliable track record.
HD has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)10.5%
Div Incr Years15
Div Non Decr Years34
5.3 Sustainability
61.38% of the earnings are spent on dividend by HD. 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 2Y6.11%
EPS Next 3Y6.84%
359.4
+0.36 (+0.1%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Discretionary Distribution & Retail
GICS IndustrySpecialty Retail
Earnings (Last)
Earnings (Next)
Inst Owners74.51%
Inst Owner Change0.02%
Ins Owners0.04%
Ins Owner Change1.06%
Market Cap357.58B
Analysts78.8
Price Target423.84 (17.93%)
Short Float %1.16%
Short Ratio3.35
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.46% |
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)-0.1%
PT rev (3m)-3.07%
EPS NQ rev (1m)-0.1%
EPS NQ rev (3m)0.03%
EPS NY rev (1m)0.19%
EPS NY rev (3m)-0.35%
Revenue NQ rev (1m)-0.01%
Revenue NQ rev (3m)0.07%
Revenue NY rev (1m)0.01%
Revenue NY rev (3m)0.03%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 24.2 | ||
| Fwd PE | 21.4 | ||
| P/S | 2.19 | ||
| P/FCF | 23.53 | ||
| P/OCF | 19.19 | ||
| P/B | 44.95 | ||
| P/tB | N/A | ||
| EV/EBITDA | 16 |
EPS(TTM)14.85
EY4.13%
EPS(NY)16.8
Fwd EY4.67%
FCF(TTM)15.27
FCFY4.25%
OCF(TTM)18.73
OCFY5.21%
SpS163.78
BVpS8
TBVpS-20.61
PEG (NY)6.62
PEG (5Y)3.1
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 | 6.03 |
F-Score4
WACC9.37%
ROIC/WACC2.59
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 Y3.66%
EPS Next 2Y6.11%
EPS Next 3Y6.84%
EPS Next 5Y6.66%
Revenue 1Y (TTM)7.33%
Revenue growth 3Y1.81%
Revenue growth 5Y7.67%
Sales Q2Q%9.44%
Revenue Next Year3.51%
Revenue Next 2Y3.83%
Revenue Next 3Y3.94%
Revenue Next 5Y3.93%
EBIT growth 1Y1.71%
EBIT growth 3Y-2.61%
EBIT growth 5Y6.32%
EBIT Next Year16.25%
EBIT Next 3Y9.45%
EBIT Next 5Y6.28%
FCF growth 1Y15.81%
FCF growth 3Y5.24%
FCF growth 5Y8.2%
OCF growth 1Y13.37%
OCF growth 3Y6.13%
OCF growth 5Y7.68%