One thing that came out of the recent earnings report from home improvement giant Home Depot (HD) is that the do-it-yourselfer market is a bit sluggish. With that in mind, Home Depot is leaning extra hard on the professional market to help take up some of the slack. That revelation is giving shareholders a few qualms, and prompted a fractional loss in Home Depot shares in Thursday morning’s trading.
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“Scale as a strategy” is the phrase that seems to be taking up more and more of the retail landscape these days. This is particularly true in home improvement, where the do-it-yourselfer market finds itself subject to the same slings and arrows as a lot of discretionary income shopping. Thus, the home improvement retailer is looking more to the professional market, where repairs are vital, and the vagaries of the market less weighty.
“A new competitive model” is emerging, reports note. A model where appliance discounts and home and garden demand is almost secondary to the professional contractor and the relevant needs of that sector. We have already seen Home Depot make several moves—new acquisitions, new mergers, new services and more—all connected to the idea that the contractor is a lot more important now. And Home Depot’s progress on that path is not likely to slow down.
Bracing for Disaster
Meanwhile, Home Depot is also getting ready for storm season. Whether it is hurricanes in the south or tornadoes farther north, Home Depot locations will often be called on to help regular people clean up after tragedy. And The Home Depot Foundation is putting $5.5 million in disaster preparedness and “community resilience” ahead of the season.
Home Depot has started up the Disaster Response Command Center to better coordinate emergency response efforts, and is also putting cash into things like an “energy hub” for Operation Blessing that gives community members access to portable electricity to recharge power tools after disasters. Repair and rehabilitation efforts across several programs are also involved.
Is Home Depot a Good Long-Term Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on HD stock based on 19 Buys and six Holds assigned in the past three months, as indicated by the graphic below. After a 15.17% loss in its share price over the past year, the average HD price target of $379.95 per share implies 22.95% upside potential.
