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Home Depot (HD)
NYSE:HD
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Home Depot
(NYSE:HD)
68Neutral
Positive Factors
Customer Transactions
Total customer transactions increased significantly by 7.6% year-over-year, marking a positive shift from previous quarters.
Earnings
Home Depot reported adjusted earnings per share that exceeded both Goldman Sachs' estimate and consensus expectations.
Sales Growth
Net sales increased by 14.1% year-over-year, surpassing both Goldman Sachs' and consensus expectations.
Negative Factors
Guidance
Home Depot's guidance for fiscal year 2025 came in below consensus expectations in terms of sales growth and adjusted earnings per share.
Macro Uncertainty
Macro uncertainty could make HD's medium-term path bumpy, although it is considered a preferred way to take advantage of a housing market bouncing along a bottom.
Operating Margin
Home Depot's operating margin decreased to 11.7%, falling short of Goldman Sachs' estimate and matching the consensus.
Home Depot (HD) vs. S&P 500 (SPY)
Market Cap
$361.36B
Dividend Yield2.56%
Average Volume (3M)3.90M
Price to Earnings (P/E)23.6
Beta (1Y)1.17
Revenue Growth4.48%
EPS Growth-1.27%
CountryUS
Employees470,100
SectorConsumer Cyclical
Sector Strength48
IndustryHome Improvement
Share Statistics
EPS (TTM)14.91
Shares Outstanding993,362,600
10 Day Avg. Volume4,493,815
30 Day Avg. Volume3,902,920
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)2.26
Price to Cash Flow (P/CF)20.60
P/FCF Ratio25.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$441.95Price Target Upside21.49% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering25
Home Depot Business Overview & Revenue Model
Company DescriptionThe Home Depot, Inc. operates as a home improvement retailer. It operates The Home Depot stores that sell various building materials, home improvement products, lawn and garden products, and décor products, as well as facilities maintenance, repair, and operations products The company also offers installation services for flooring, cabinets and cabinet makeovers, countertops, furnaces and central air systems, and windows. In addition, it provides tool and equipment rental services. The company primarily serves homeowners; and professional renovators/remodelers, general contractors, maintenance professionals, handymen, property managers, building service contractors, and specialty tradesmen, such as electricians, plumbers, and painters. It also sells its products through websites, including homedepot.com; blinds.com, an online site for custom window coverings; and thecompanystore.com, an online site for textiles and décor products. As of December 31, 2021, the company operated 2,317 stores in the United States. The Home Depot, Inc. was incorporated in 1978 and is based in Atlanta, Georgia.
How the Company Makes MoneyHome Depot makes money primarily through the sale of home improvement products and services. The company's revenue model is based on retail sales from its extensive network of physical stores and its e-commerce platform. Key revenue streams include the sale of building materials, hardware, plumbing, electrical supplies, paint, flooring, and outdoor garden products. Home Depot also generates income from installation services and tool rental services, which cater to customers who require assistance with their home improvement projects. The company benefits from strategic partnerships with suppliers and vendors, allowing it to offer a wide range of products at competitive prices. Additionally, Home Depot's Pro program, which targets professional contractors and tradespeople, contributes significantly to its earnings by offering specialized services, volume pricing, and dedicated support.
Home Depot Financial Statement Overview
Summary
Home Depot demonstrates a strong financial performance with solid revenue growth, profitability, and cash flow generation. Despite a high debt load, the company manages to maintain operational efficiency and profitability. Continuous monitoring of leverage and equity positions is advised to ensure financial stability and growth sustainability.Income Statement
Home Depot exhibits a strong financial performance with a consistent revenue growth trend and solid profitability margins. The gross profit margin remains stable around 33-34%, and the net profit margin has been consistently healthy, ranging from 9% to 11%. The revenue growth rate over the years has been commendable, with a notable increase from 2020 to 2025. EBIT and EBITDA margins are also strong, indicating effective cost management and operational efficiency.85
Very Positive
Balance Sheet
The balance sheet shows substantial leverage with a high debt-to-equity ratio due to significant total debt levels. However, the company maintains a positive return on equity, although it is impacted by low stockholders' equity figures. The equity ratio is low, which suggests a higher reliance on debt financing. Recent improvements in equity figures are positive but still require cautious monitoring.70
Positive
Cash Flow
Home Depot's cash flow position is robust, with consistent generation of free cash flow, evidenced by positive free cash flow growth over time. The operating cash flow to net income ratio indicates strong conversion efficiency. However, fluctuations in free cash flow growth suggest some volatility in cash generation, requiring attention to sustaining long-term cash flow stability.78
Positive
| Breakdown | ||||
| Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 159.51B | 152.67B | 157.40B | 151.16B | 132.11B | Gross Profit |
| 53.31B | 50.96B | 52.78B | 50.83B | 44.85B | EBIT |
| 21.53B | 21.69B | 24.04B | 23.04B | 18.28B | EBITDA |
| 24.76B | 24.94B | 27.07B | 25.95B | 20.84B | Net Income Common Stockholders |
| 14.81B | 15.14B | 17.11B | 16.43B | 12.87B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 1.66B | 3.76B | 2.76B | 2.34B | 7.89B | Total Assets |
| 96.12B | 76.53B | 76.44B | 71.88B | 70.58B | Total Debt |
| 62.29B | 52.24B | 50.36B | 46.27B | 43.42B | Net Debt |
| 60.63B | 48.48B | 47.61B | 43.93B | 35.53B | Total Liabilities |
| 89.48B | 75.49B | 74.88B | 73.57B | 67.28B | Stockholders Equity |
| 6.64B | 1.04B | 1.56B | -1.70B | 3.30B |
| Cash Flow | Free Cash Flow | |||
| 16.32B | 17.95B | 11.50B | 14.01B | 16.38B | Operating Cash Flow |
| 19.81B | 21.17B | 14.62B | 16.57B | 18.84B | Investing Cash Flow |
| -21.03B | -4.73B | -3.14B | -2.97B | -10.17B | Financing Cash Flow |
| -694.00M | -15.44B | -10.99B | -19.12B | -2.98B |
Home Depot Technical Analysis
Negative
363.77
Price Trends
390.57
Negative
396.49
Negative
380.29
Negative
Market Momentum
-11.11
Positive
43.76
Neutral
38.72
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HD, the sentiment is Negative. The current price of 363.77 is below the 20-day moving average (MA) of 369.58, below the 50-day MA of 390.57, and below the 200-day MA of 380.29, indicating a bearish trend. The MACD of -11.11 indicates Positive momentum. The RSI at 43.76 is Neutral, neither overbought nor oversold. The STOCH value of 38.72 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HD.
Home Depot Risk Analysis
Home Depot disclosed 25 risk factors in its most recent earnings report. Home Depot reported the most risks in the “Production” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Home Depot Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $27.89B | 25.71 | 49.83% | 1.70% | 2.25% | 1.00% | |
71 Outperform | $689.29B | 35.75 | 22.23% | 0.96% | 5.07% | 25.86% | |
68 Neutral | $361.36B | 23.55 | 385.37% | 2.56% | 4.48% | -1.27% | |
68 Neutral | $20.15B | 18.62 | 53.91% | 1.39% | -0.50% | 24.11% | |
61 Neutral | $15.99B | 17.19 | 31.63% | 5.11% | -4.43% | -24.58% | |
59 Neutral | $12.50B | 11.24 | 1.20% | 3.72% | 1.27% | -20.93% | |
59 Neutral | $128.22B | 18.58 | -51.07% | 2.00% | -3.13% | -7.21% |
* Consumer Cyclical Sector Average
Performance Comparison
HD
Home Depot
363.77
-6.94
-1.87%
BBY
Best Buy Co
75.67
-2.00
-2.57%
LOW
Lowe's
232.89
-13.99
-5.67%
TSCO
Tractor Supply
53.53
2.73
5.37%
WMT
Walmart
87.49
27.66
46.23%
WSM
Williams-Sonoma
170.30
18.35
12.08%
Home Depot Earnings Call Summary
Earnings Call Date: Feb 25, 2025 | % Change Since: -4.27% | Next Earnings Date: May 20, 2025
Earnings Call Sentiment Neutral
The earnings call presented a balanced view of Home Depot's performance, highlighting impressive sales growth and strategic expansion efforts, including the successful integration of SRS and new store openings. However, this is offset by challenges in the broader economic environment, particularly the impact of high interest rates on larger projects and a decline in comp sales and earnings per share. Despite these challenges, there is a strong focus on strategic investments and market share growth.Highlights
Total Sales Growth
Sales for fiscal 2024 were $159.5 billion, an increase of 4.5% from the same period last year.
Fourth Quarter Performance
In the fourth quarter, comp sales increased 0.8% from last year and U.S. store comps were up 1.3%.
SRS Acquisition Contribution
SRS contributed $6.4 billion in sales for the seven months owned, with expectations for mid-single digit organic growth in fiscal 2025.
Geographic Performance
Fifteen of nineteen U.S. regions delivered positive comps, with both Canada and Mexico reporting positive comps in local currency.
Expansion and New Stores
In fiscal 2024, Home Depot opened twelve new stores and plans to open thirteen more in fiscal 2025.
Pro Customer Strategy
Investments in store experience and capabilities have driven over $1 billion in incremental sales on an annualized basis in seventeen markets.
Lowlights
Comp Sales Decline for the Year
Total company comp sales decreased 1.8% and U.S. comp sales decreased 1.8% for fiscal 2024.
Interest Rate Environment Impact
Higher interest rates continue to pressure larger remodeling projects.
Operating Margin Decline
Operating margin for the year was 13.5%, down from 14.2% in 2023, with a forecasted decline for fiscal 2025.
Earnings Per Share Decline
Diluted earnings per share for fiscal 2024 were $14.91, a decrease of 1.3% compared to fiscal 2023.
Challenges with Larger Projects
There is continued pressure on larger discretionary projects which typically leverage financing.
Company Guidance
During the Home Depot Fourth Quarter 2024 Earnings Conference Call, Ted Decker, CEO, outlined the company's financial performance and future guidance. Fiscal 2024 sales reached $159.5 billion, a 4.5% increase, while comp sales declined by 1.8%. U.S. stores experienced a negative comp of 1.8%, but fourth-quarter comp sales rose by 0.8%. Adjusted diluted earnings per share were $15.24, nearly unchanged from the prior year. The acquisition of SRS contributed $6.4 billion in sales over seven months, with expectations for mid-single-digit organic growth in 2025. Home Depot plans to open 13 new stores in 2025, projecting total sales growth of 2.8% and comp sales growth of 1%. The adjusted operating margin is anticipated to be 13.4%, with a slight decrease in adjusted diluted earnings per share by approximately 2% compared to 2024. The company highlighted ongoing investments in strategic initiatives, including enhancing the interconnected shopping experience and expanding Pro customer services.Home Depot Corporate Events
Private Placements and FinancingM&A Transactions
Home Depot Adjusts Credit Facilities After Acquisition
Neutral
Dec 19, 2024
Home Depot has adjusted its credit facilities following the acquisition of SRS Distribution Inc. The company terminated its $1 billion three-year credit facility and reduced commitments under its $3.5 billion 364-day credit facility to $2 billion, ensuring a $7 billion borrowing capacity for its commercial paper program.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.