We know that home improvement giant Home Depot (HD) has been actively courting pro builders for some time now. We also know that the standard retail do-it-yourselfer (DIY) market is not what it once was. So Home Depot is putting a whole new strength behind its new battle plan, dubbed “win the pro.” This is not quite what investors wanted to hear, as shares slipped fractionally in Wednesday morning’s trading.
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New reports suggest that Home Depot is piling in on getting professional builders under its umbrella, putting billions of dollars into drawing contractors and similar pros into its stores to fill orders and make business happen. Home Depot has already been on this path for some time, but the new reports suggest Home Depot will continue building out from there. One recent example drove this point home with Home Depot’s acquisition of Simpl Automation.
Reports note that the cost of a typical remodeling project is up 45% over what it was in just 2019. That plus higher interest rates is keeping the standard do-it-yourselfer sidelined on anything but the most necessary projects. “With housing turnover as low as it is, totally flat with no growth in new construction, our growth has to come from share capture right now,” noted CEO Ted Decker.
Do You Collude?
Word also recently emerged about a price-fixing scheme out of Amazon (AMZN) that reportedly included Home Depot, if tangentially. The scheme featured Amazon contacting vendors and telling them to offer the same prices on other websites as they did on Amazon. Those who failed would be met with “dire consequences.”
Just what those consequences were was unclear, but given the sheer range and scope of Amazon’s operations, just removing vendors’ access to Amazon might have qualified. So for now, it might actually mean cost savings to go directly through Home Depot for some things, instead of turning to Amazon. Amazon, for its part, calls the case against it “…weak.”
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 3.51% loss in its share price over the past year, the average HD price target of $425.06 per share implies 24.76% upside potential.
