Home improvement giant Home Depot (HD) may have started its week strong, but things went south quickly as multiple new headaches emerged. New laws about paint in Maryland sent prices up, and a new lawsuit over plate readers in parking lots in California made things no better. Investors remained optimistic, though, and gave Home Depot stock a fractional boost in Tuesday morning’s trading.
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The license plate reader issue has been building for some time, reports note, and the lawsuit was recently moved from Contra Costa County Superior Court to Northern California federal court. Essentially, the lawsuit alleges that plate readers in parking lots gather vast amounts of data on those who have done nothing wrong—along with those who have—but the innocent have no right to opt out of the collection process or have similar protections.
Home Depot, for its part, acknowledges that the plate readers exist, but they are there for “…detecting and preventing theft and protecting the safety of our customers and associates.” Home Depot also notes that it does not “…grant access to our license plate readers to federal law enforcement.” So just how far this suit will go is anyone’s guess.
Paint Problems
Meanwhile, in Maryland, a new law is hitting Home Depot customers hard when they shop for paint. Maryland’s paint stewardship law ordered the creation of “…environmentally sustainable paint recycling programs.” The money to create those programs comes from—you guessed it—the sale of paint. Additional fees range from $0.50 for containers under a half-pint to $2.25 on containers over two gallons in size.
Naturally, another price hike is not sitting well with customers. One customer called it “…a huge, huge, huge money grab.” Even lawmakers with the Freedom Caucus had concerns, noting in a letter to Governor Wes Moore, “We have serious concerns about the structure and oversight of the program.”
Is Home Depot a Good Long-Term Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on HD stock based on 17 Buys and three Holds assigned in the past three months, as indicated by the graphic below. After a 3.66% loss in its share price over the past year, the average HD price target of $425.06 per share implies 24.2% upside potential.
