HOME DEPOT INC (HD) Stock Fundamental Analysis
NYSE:HD - New York Stock Exchange, Inc. - US4370761029 - Common Stock - Currency: USD
Overall HD gets a fundamental rating of 5 out of 10. We evaluated HD against 121 industry peers in the Specialty Retail industry. HD has an excellent profitability rating, but there are some minor concerns on its financial health. HD has a valuation in line with the averages, but it does not seem to be growing.
1. Profitability
1.1 Basic Checks
In the past year HD was profitable.
In the past year HD had a positive cash flow from operations.
HD had positive earnings in each of the past 5 years.
In the past 5 years HD always reported a positive cash flow from operatings.
1.2 Ratios
HD has a better Return On Assets (15.40%) than 90.91% of its industry peers.
With an excellent Return On Equity value of 222.98%, HD belongs to the best of the industry, outperforming 100.00% of the companies in the same industry.
The Return On Invested Capital of HD (24.19%) is better than 89.26% of its industry peers.
HD had an Average Return On Invested Capital over the past 3 years of 29.60%. This is significantly above the industry average of 14.45%.
The last Return On Invested Capital (24.19%) for HD is well below the 3 year average (29.60%), which needs to be investigated, but indicates that HD had better years and this may not be a problem.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 15.4% | ||
| ROE | 222.98% | ||
| ROIC | 24.19% |
ROA(3y)19.19%
ROA(5y)19.73%
ROE(3y)922.84%
ROE(5y)N/A
ROIC(3y)29.6%
ROIC(5y)32.3%
1.3 Margins
HD has a better Profit Margin (9.28%) than 88.43% of its industry peers.
HD's Profit Margin has declined in the last couple of years.
HD has a Operating Margin of 13.49%. This is amongst the best in the industry. HD outperforms 90.08% of its industry peers.
HD's Operating Margin has been stable in the last couple of years.
HD's Gross Margin of 33.42% is in line compared to the rest of the industry. HD outperforms 42.15% of its industry peers.
In the last couple of years the Gross Margin of HD has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 13.49% | ||
| PM (TTM) | 9.28% | ||
| GM | 33.42% |
OM growth 3Y-4.34%
OM growth 5Y-1.25%
PM growth 3Y-5.13%
PM growth 5Y-1.87%
GM growth 3Y-0.21%
GM growth 5Y-0.39%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so HD is creating value.
The number of shares outstanding for HD remains at a similar level compared to 1 year ago.
The number of shares outstanding for HD has been reduced compared to 5 years ago.
The debt/assets ratio for HD has been reduced compared to a year ago.
2.2 Solvency
HD has a debt to FCF ratio of 3.27. This is a good value and a sign of high solvency as HD would need 3.27 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 3.27, HD is in the better half of the industry, outperforming 68.59% of the companies in the same industry.
HD has a Debt/Equity ratio of 7.35. This is a high value indicating a heavy dependency on external financing.
Looking at the Debt to Equity ratio, with a value of 7.35, HD is doing worse than 79.34% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 7.35 | ||
| Debt/FCF | 3.27 | ||
| Altman-Z | N/A |
ROIC/WACC2.73
WACC8.87%
2.3 Liquidity
A Current Ratio of 1.11 indicates that HD should not have too much problems paying its short term obligations.
With a Current ratio value of 1.11, HD is not doing good in the industry: 67.77% of the companies in the same industry are doing better.
HD has a Quick Ratio of 1.11. This is a bad value and indicates that HD is not financially healthy enough and could expect problems in meeting its short term obligations.
HD has a Quick ratio of 0.29. This is in the lower half of the industry: HD underperforms 76.03% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.11 | ||
| Quick Ratio | 0.29 |
3. Growth
3.1 Past
The earnings per share for HD have decreased by -1.19% in the last year.
HD shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 7.80% yearly.
The Revenue has been growing slightly by 4.48% in the past year.
Measured over the past years, HD shows a small growth in Revenue. The Revenue has been growing by 7.67% on average per year.
EPS 1Y (TTM)-1.19%
EPS 3Y-1.31%
EPS 5Y7.8%
EPS Q2Q%7.09%
Revenue 1Y (TTM)4.48%
Revenue growth 3Y1.81%
Revenue growth 5Y7.67%
Sales Q2Q%14.14%
3.2 Future
Based on estimates for the next years, HD will show a quite strong growth in Earnings Per Share. The EPS will grow by 8.78% on average per year.
The Revenue is expected to grow by 3.86% on average over the next years.
EPS Next Y4.02%
EPS Next 2Y6.78%
EPS Next 3Y7.4%
EPS Next 5Y8.78%
Revenue Next Year3.48%
Revenue Next 2Y3.86%
Revenue Next 3Y3.95%
Revenue Next 5Y3.86%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 23.80, which indicates a rather expensive current valuation of HD.
60.33% of the companies in the same industry are more expensive than HD, based on the Price/Earnings ratio.
The average S&P500 Price/Earnings ratio is at 28.29. HD is around the same levels.
A Price/Forward Earnings ratio of 22.88 indicates a rather expensive valuation of HD.
HD's Price/Forward Earnings ratio is in line with the industry average.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.08, HD is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.8 | ||
| Fwd PE | 22.88 |
4.2 Price Multiples
HD's Enterprise Value to EBITDA is on the same level as the industry average.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of HD indicates a somewhat cheap valuation: HD is cheaper than 66.12% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 21.62 | ||
| EV/EBITDA | 15.99 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The excellent profitability rating of HD may justify a higher PE ratio.
PEG (NY)5.93
PEG (5Y)3.05
EPS Next 2Y6.78%
EPS Next 3Y7.4%
5. Dividend
5.1 Amount
HD has a Yearly Dividend Yield of 2.60%.
HD's Dividend Yield is rather good when compared to the industry average which is at 5.44. HD pays more dividend than 83.47% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.57, HD has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.6% |
5.2 History
On average, the dividend of HD grows each year by 10.50%, which is quite nice.
HD has paid a dividend for at least 10 years, which is a reliable track record.
HD has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)10.5%
Div Incr Years15
Div Non Decr Years34
5.3 Sustainability
60.31% of the earnings are spent on dividend by HD. This is not a sustainable payout ratio.
HD's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP60.31%
EPS Next 2Y6.78%
EPS Next 3Y7.4%
355.06
+9.07 (+2.62%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Discretionary Distribution & Retail
GICS IndustrySpecialty Retail
Earnings (Last)
Earnings (Next)
Inst Owners72.73%
Inst Owner Change0.01%
Ins Owners0.04%
Ins Owner Change1.34%
Market Cap352.90B
Analysts78.8
Price Target437.24 (23.15%)
Short Float %1.02%
Short Ratio2.91
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.6% |
Yearly Dividend8.99
Dividend Growth(5Y)10.5%
DP60.31%
Div Incr Years15
Div Non Decr Years34
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-2.33%
Min EPS beat(2)-2.55%
Max EPS beat(2)-2.12%
EPS beat(4)0
Avg EPS beat(4)-1.84%
Min EPS beat(4)-2.55%
Max EPS beat(4)-0.62%
EPS beat(8)1
Avg EPS beat(8)-1.35%
EPS beat(12)2
Avg EPS beat(12)-0.49%
EPS beat(16)4
Avg EPS beat(16)1.55%
Revenue beat(2)0
Avg Revenue beat(2)-1.13%
Min Revenue beat(2)-1.55%
Max Revenue beat(2)-0.7%
Revenue beat(4)0
Avg Revenue beat(4)-2.12%
Min Revenue beat(4)-3.55%
Max Revenue beat(4)-0.7%
Revenue beat(8)0
Avg Revenue beat(8)-2.56%
Revenue beat(12)1
Avg Revenue beat(12)-1.95%
Revenue beat(16)3
Avg Revenue beat(16)-1.24%
PT rev (1m)-1.19%
PT rev (3m)-1.78%
EPS NQ rev (1m)-0.08%
EPS NQ rev (3m)-1.36%
EPS NY rev (1m)-3.19%
EPS NY rev (3m)-3.3%
Revenue NQ rev (1m)-0.03%
Revenue NQ rev (3m)0.48%
Revenue NY rev (1m)0.05%
Revenue NY rev (3m)0.22%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.8 | ||
| Fwd PE | 22.88 | ||
| P/S | 2.21 | ||
| P/FCF | 21.62 | ||
| P/OCF | 17.81 | ||
| P/B | 53.15 | ||
| P/tB | N/A | ||
| EV/EBITDA | 15.99 |
EPS(TTM)14.92
EY4.2%
EPS(NY)15.52
Fwd EY4.37%
FCF(TTM)16.42
FCFY4.63%
OCF(TTM)19.93
OCFY5.61%
SpS160.49
BVpS6.68
TBVpS-21.95
PEG (NY)5.93
PEG (5Y)3.05
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 15.4% | ||
| ROE | 222.98% | ||
| ROCE | 31.91% | ||
| ROIC | 24.19% | ||
| ROICexc | 24.79% | ||
| ROICexgc | 43.53% | ||
| OM | 13.49% | ||
| PM (TTM) | 9.28% | ||
| GM | 33.42% | ||
| FCFM | 10.23% |
ROA(3y)19.19%
ROA(5y)19.73%
ROE(3y)922.84%
ROE(5y)N/A
ROIC(3y)29.6%
ROIC(5y)32.3%
ROICexc(3y)31.18%
ROICexc(5y)34.99%
ROICexgc(3y)44.07%
ROICexgc(5y)47.45%
ROCE(3y)38.92%
ROCE(5y)42.7%
ROICexcg growth 3Y-8.8%
ROICexcg growth 5Y1.22%
ROICexc growth 3Y-16.36%
ROICexc growth 5Y-8.21%
OM growth 3Y-4.34%
OM growth 5Y-1.25%
PM growth 3Y-5.13%
PM growth 5Y-1.87%
GM growth 3Y-0.21%
GM growth 5Y-0.39%
F-Score6
Asset Turnover1.66
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 7.35 | ||
| Debt/FCF | 3.27 | ||
| Debt/EBITDA | 1.93 | ||
| Cap/Depr | 92.66% | ||
| Cap/Sales | 2.18% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 78.34% | ||
| Profit Quality | 110.26% | ||
| Current Ratio | 1.11 | ||
| Quick Ratio | 0.29 | ||
| Altman-Z | N/A |
F-Score6
WACC8.87%
ROIC/WACC2.73
Cap/Depr(3y)98.95%
Cap/Depr(5y)96.86%
Cap/Sales(3y)2.09%
Cap/Sales(5y)1.97%
Profit Quality(3y)98.66%
Profit Quality(5y)101.7%
High Growth Momentum
Growth
EPS 1Y (TTM)-1.19%
EPS 3Y-1.31%
EPS 5Y7.8%
EPS Q2Q%7.09%
EPS Next Y4.02%
EPS Next 2Y6.78%
EPS Next 3Y7.4%
EPS Next 5Y8.78%
Revenue 1Y (TTM)4.48%
Revenue growth 3Y1.81%
Revenue growth 5Y7.67%
Sales Q2Q%14.14%
Revenue Next Year3.48%
Revenue Next 2Y3.86%
Revenue Next 3Y3.95%
Revenue Next 5Y3.86%
EBIT growth 1Y-0.75%
EBIT growth 3Y-2.61%
EBIT growth 5Y6.32%
EBIT Next Year16.46%
EBIT Next 3Y9.88%
EBIT Next 5Y6.61%
FCF growth 1Y-9.03%
FCF growth 3Y5.24%
FCF growth 5Y8.2%
OCF growth 1Y-6.43%
OCF growth 3Y6.13%
OCF growth 5Y7.68%