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The Home Depot, Inc. (HD), headquartered in Atlanta, Georgia, is the world’s largest home improvement specialty retailer with more than 2,300 stores across North America. Valued at $326.42 billion by market cap, the company offers a diverse range of branded and proprietary home improvement items, building materials, lawn and garden products, décor products, and related services. It functions through a network of distribution and fulfillment centers and a number of e-commerce websites.
Shares of this leading home improvement retailer have underperformed the broader market considerably over the past year. HD has gained 12.4% over this time frame, while the S&P 500 Index ($SPX) has rallied 24.5%. In 2024, shares of HD are down 5%, while the SPX is up 9.8% on a YTD basis.
Narrowing the focus, HD’s underperformance is also apparent compared to the Consumer Disc ETF Vanguard (VCR). The exchange-traded fund has gained about 18.9% over the past year. The ETF’s marginal losses on a YTD basis compare to the stock’s higher loss over the same time frame.
On May 14, HD shares fell nearly 1% after the company reported its Q1 results. Its comparable sales declined 2.8%. The company’s revenue came in at $36.42 billion, lower than the analyst estimates of $36.65 billion. Its EPS stood at $3.63, compared to Street expectations of $3.59. The company has guided for 1% revenue and EPS growth for the full year.
For the current fiscal year, ending in January 2025, analysts expect HD’s EPS to grow 1.3% to $15.31 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 31 analysts covering HD stock, the consensus rating is a “Moderate Buy.” That’s based on 21 “Strong Buy” ratings, one “Moderate Buy,” and nine “Holds.”
This configuration is more bullish than three months ago, with 19 suggesting a “Strong Buy.”
Recently, Evercore ISI’s analyst maintained an “Outperform” rating on HD stock and reduced the price target from $420 to $390, implying a potential upside of 18.5% from current levels.
The mean price target of $382.48 represents a 16.2% premium to HD’s current price levels. The Street-high price target of $425 suggests an ambitious upside potential of 29.1%.
On the date of publication, Dipanjan Banchur did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
