Home improvement giant Home Depot (HD) has been on the front line of controversy lately, particularly surrounding the various raids that the Border Patrol has staged on its parking lots. But through it all, Home Depot has remained comparatively mum. That is starting to serve as a new point of concern for some analysts. And shareholders are starting to share that concern, as shares slipped nearly 1.5% in Thursday afternoon’s trading.
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Home Depot has stayed surprisingly quiet about the raids, whether out of an active interest in staying out of politics—which has done significant damage to many other companies in the last few years—or out of a passive hope that the whole matter will blow over eventually. One point some recently noted about Home Depot’s recent earnings call was that no one mentioned the raids. Reporters and analysts on the call asked no questions, and Home Depot supplied no answers.
But then, perhaps, the statement that Home Depot has issued on several occasions prior speaks for itself. Home Depot noted, “We ask associates to report any suspected immigration enforcement operations immediately and not to engage for their own safety. We aren’t notified that immigration enforcement activities are going to happen, and we aren’t involved in them. In many cases, we don’t know that arrests have taken place until after they’re over. We’re required to follow all federal and local rules and regulations in every market where we operate.”
Improving Circumstances
Home Depot has been concerned about the state of the do-it-yourselfer market, sufficiently so that it is looking to build out its connections in the pro builder community to help offset any potential losses with do-it-yourselfers. But there are some signs that this market may be about to turn around, though Home Depot is being cautious about embracing potential improvements before they become real.
Two key points that were restraining the consumer from making upgrades were economic uncertainty and interest rates. But with a new tax policy coming into play, and the potential for rate cuts—President Trump has been railing against Jerome “Too Late” Powell’s management of the Federal Reserve for some time now—coming in September, things may turn around for Home Depot. However, these changes may not materialize, so Home Depot is remaining cautious as well as optimistic.
Is Home Depot a Good Long-Term Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on HD stock based on 18 Buys and six Holds assigned in the past three months, as indicated by the graphic below. After a 9.96% rally in its share price over the past year, the average HD price target of $445.14 per share implies 12.3% upside potential.
