The Home Depot, Inc. (HD) Analyst’s Outlook on this Recent Surge

Stock of The Home Depot, Inc. (HD) opened at $220.05 and last traded at $221.79 x 1000. More than 4,454,704 shares exchanged hands compared to an average daily volume of 4,035,921 shares. At the current pps, the market capitalization stands at 243.186B.

Let’s take a look at how the stock has performed this year so far. The Home Depot, Inc has moved 9.53% in the last 5 days or 2.54% in the last 1 month. In long-term, The Home Depot, Inc has changed 15.11% in 3 months and  10.42% in this year itself. Below is the chart to get a feel for the recent price action.


Fundamentals you simply cannot ignore

Investors try to use stocks with high beta values to quickly recoup their investments after sharp market losses. The Home Depot, Inc. (HD) currently has a Beta value of 0.95 . Beta is a measurement of a stock’s price fluctuations, which is often called volatility and is used by investors to gauge how quickly a stock’s price will rise or fall. A stock with a beta of greater than 1.0 is riskier and has greater price fluctuations, while stocks with beta values of less than 1.0 are steadier and generally larger companies. Beta is often measured against the S&P; 500 index. An S&P; 500 stock with a beta of 2.0 produced a 20 percent increase in returns during a period of time when the S&P; 500 Index grew only 10 percent. This same measurement also means the stock would lose 20 percent when the market dropped by only 10 percent. Next, let’s take a look at The Home Depot, Inc current P/E ratio. The Home Depot, Inc. (HD) currently has a PE ratio of 22.25. PE ratio is an important parameter to look at when trading a stock mostly because it is easy to calculate. There are a couple of ways to calculate PE ratio either by dividing share price by earnings per share or dividing the market cap by net income. It is important to note that the earnings are usually taken from the trailing twelve months (TTM). Nevertheless, P/E tells us how much an investor is willing to pay for $1 of a company’s earnings. The long-term average P/E is around 15, so on average, investors are willing to pay $15 for every dollar of earnings. Another useful way to look at this: Turn the P/E ratio around to look at the E/P ratio, which when expressed as a percentage gives us the earnings yield. For instance: 1/15 gives us an earnings yield of 6.67%.

While we have already looked at The Home Depot, Inc beta and P/E ratio, the EPS cannot be ignored. The Home Depot, Inc EPS for the trailing twelve months was 9.93. Traders and investors often use earnings per share (TTM) to determine a company’s profitability for the past year. So in essence, EPS is the amount of a company’s net income per share of common stock. Earnings per share equal the company’s net income less any dividends paid on preferred stock divided by the weighted average number of common stock shares outstanding during the year. The Home Depot, Inc is estimated to release its next earnings report on 1 / 2020 (N/A-Not know at this time). It would be interesting to see how the earnings fair out considering the recent developments.

The Analyst Chirp:

The Home Depot, Inc. (HD) has received an average target price from analysts of $212.82 amounting to a recommendation rating of Overweight. That comes from 32 different analysts. Perhaps, the driver for that assessment comes from the company’s valuations. Right now, we are looking at a median price-to-earnings ratio for this calendar year of 20.00. To give a sense of trend, the same data point on the estimate for next year is currently sitting at 18.43 times earnings. Drilling down a bit further, this quarter, we are looking at an average estimate from analysts for earnings per share level of 29.00. That shift to 29.00 heading into next quarter.





Leave a comment