HOME DEPOT INC (HD)
US4370761029 - Common Stock
We assign a fundamental rating of 6 out of 10 to HD. HD was compared to 126 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
In the past year HD was profitable.
HD had a positive operating cash flow in the past year.
HD had positive earnings in each of the past 5 years.
HD had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
Looking at the Return On Assets, with a value of 19.79%, HD belongs to the top of the industry, outperforming 96.83% of the companies in the same industry.
HD has a better Return On Equity (1450.48%) than 99.21% of its industry peers.
The Return On Invested Capital of HD (30.26%) is better than 95.24% of its industry peers.
The Average Return On Invested Capital over the past 3 years for HD is significantly above the industry average of 13.64%.
The 3 year average ROIC (34.87%) for HD is well above the current ROIC(30.26%). The reason for the recent decline needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 19.79% | ||
| ROE | 1450.48% | ||
| ROIC | 30.26% |
ROA(3y)21.68%
ROA(5y)21.04%
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)34.87%
ROIC(5y)34.55%
1.3 Margins
Looking at the Profit Margin, with a value of 9.92%, HD belongs to the top of the industry, outperforming 92.06% of the companies in the same industry.
In the last couple of years the Profit Margin of HD has remained more or less at the same level.
HD has a better Operating Margin (14.21%) than 92.06% of its industry peers.
In the last couple of years the Operating Margin of HD has remained more or less at the same level.
With a Gross Margin value of 33.38%, HD is not doing good in the industry: 60.32% of the companies in the same industry are doing better.
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 | 14.21% | ||
| PM (TTM) | 9.92% | ||
| GM | 33.38% |
OM growth 3Y-2.55%
OM growth 5Y-0.52%
PM growth 3Y0.61%
PM growth 5Y-0.71%
GM growth 3Y-0.56%
GM growth 5Y-0.57%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), HD is creating value.
The number of shares outstanding for HD has been reduced compared to 1 year ago.
Compared to 5 years ago, HD has less shares outstanding
Compared to 1 year ago, HD has a worse debt to assets ratio.
2.2 Solvency
HD has an Altman-Z score of 7.32. This indicates that HD is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of HD (7.32) is better than 96.03% of its industry peers.
HD has a debt to FCF ratio of 2.46. This is a good value and a sign of high solvency as HD would need 2.46 years to pay back of all of its debts.
With a decent Debt to FCF ratio value of 2.46, HD is doing good in the industry, outperforming 68.25% of the companies in the same industry.
A Debt/Equity ratio of 40.94 is on the high side and indicates that HD has dependencies on debt financing.
HD's Debt to Equity ratio of 40.94 is on the low side compared to the rest of the industry. HD is outperformed by 84.92% of its industry peers.
Although HD does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 40.94 | ||
| Debt/FCF | 2.46 | ||
| Altman-Z | 7.32 |
ROIC/WACC3.48
WACC8.7%
2.3 Liquidity
A Current Ratio of 1.35 indicates that HD should not have too much problems paying its short term obligations.
HD has a Current ratio (1.35) which is in line with its industry peers.
HD has a Quick Ratio of 1.35. 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's Quick ratio of 0.40 is on the low side compared to the rest of the industry. HD is outperformed by 65.08% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.35 | ||
| Quick Ratio | 0.4 |
3. Growth
3.1 Past
HD shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -9.47%.
Measured over the past years, HD shows a quite strong growth in Earnings Per Share. The EPS has been growing by 8.83% on average per year.
The Revenue has decreased by -3.01% in the past year.
The Revenue has been growing slightly by 7.13% on average over the past years.
EPS 1Y (TTM)-9.47%
EPS 3Y8.17%
EPS 5Y8.83%
EPS growth Q2Q-14.55%
Revenue 1Y (TTM)-3.01%
Revenue growth 3Y4.94%
Revenue growth 5Y7.13%
Revenue growth Q2Q-2.92%
3.2 Future
HD is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 7.90% yearly.
Based on estimates for the next years, HD will show a small growth in Revenue. The Revenue will grow by 3.24% on average per year.
EPS Next Y4.76%
EPS Next 2Y6%
EPS Next 3Y7.1%
EPS Next 5Y7.9%
Revenue Next Year1.23%
Revenue Next 2Y2.01%
Revenue Next 3Y2.61%
Revenue Next 5Y3.24%
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
With a Price/Earnings ratio of 22.94, HD is valued on the expensive side.
Compared to the rest of the industry, the Price/Earnings ratio of HD indicates a somewhat cheap valuation: HD is cheaper than 61.11% of the companies listed in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 28.43, HD is valued at the same level.
A Price/Forward Earnings ratio of 21.90 indicates a rather expensive valuation of HD.
HD's Price/Forward Earnings ratio is in line with the industry average.
HD's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 20.51.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.94 | ||
| Fwd PE | 21.9 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as HD.
Based on the Price/Free Cash Flow ratio, HD is valued a bit cheaper than the industry average as 65.08% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 19.13 | ||
| EV/EBITDA | 15.43 |
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.
HD has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)4.82
PEG (5Y)2.6
EPS Next 2Y6%
EPS Next 3Y7.1%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.68%, 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 3.51. HD pays more dividend than 88.10% of the companies in the same industry.
HD's Dividend Yield is comparable with the S&P500 average which is at 2.39.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.68% |
5.2 History
On average, the dividend of HD grows each year by 14.97%, 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)14.97%
Div Incr Years14
Div Non Decr Years19
5.3 Sustainability
55.36% of the earnings are spent on dividend by HD. This is a bit on the high side, but may be sustainable.
HD's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP55.36%
EPS Next 2Y6%
EPS Next 3Y7.1%
HOME DEPOT INC
NYSE:HD (5/10/2024, 7:04:00 PM)
After market: 346.25 -0.18 (-0.05%)346.43
-1.01 (-0.29%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Discretionary Distribution & Retail
GICS IndustrySpecialty Retail
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap343.32B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.68% |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
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EPS NY rev (3m)
Revenue NQ rev (1m)
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Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.94 | ||
| Fwd PE | 21.9 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)4.82
PEG (5Y)2.6
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 19.79% | ||
| ROE | 1450.48% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 14.21% | ||
| PM (TTM) | 9.92% | ||
| GM | 33.38% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover1.99
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 40.94 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.35 | ||
| Quick Ratio | 0.4 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
Growth
EPS 1Y (TTM)-9.47%
EPS 3Y8.17%
EPS 5Y
EPS growth Q2Q
EPS Next Y4.76%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)-3.01%
Revenue growth 3Y4.94%
Revenue growth 5Y
Revenue growth Q2Q
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y