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Valued at a market cap of $387.9 billion, The Home Depot, Inc. (HD) is a home improvement retailer that offers a diverse range of branded and proprietary home improvement items, building materials, lawn and garden products, decor products, and related services. The Atlanta, Georgia-based company typically serves three primary customer groups: Do-It-Yourself, Do-It-For-Me, and Professional Customers.
Companies valued at $200 billion or more are typically classified as “mega-cap stocks,” and The Home Depot fits the label perfectly. The company is one of the world's largest home improvement retailers, with more than 2,300 stores in the United States, Canada, and Mexico.
Despite its strengths, the company has slipped 11.2% from its 52-week high of $439.37, achieved on Nov. 26, 2024. Moreover, it has fallen 8.6% over the past three months, lagging behind the broader Consumer Discretionary Select Sector SPDR Fund’s (XLY) 3.5% decline over the same time frame.
In the longer term, HD has gained 3.9% over the past 52 weeks, underperforming XLY’s 16.4% return. Moreover, on a six-month basis, shares of HD are up 4.6%, compared to XLY’s 14.3% gain over the same time frame.
To confirm its recent bearish trend, HD has been trading below its 50-day moving average since mid-February. Nonetheless, it has remained above its 200-day moving average since early August last year.
On Feb. 25, Home Depot shares rose 2.8% following its Q4 earnings release, as the company delivered a stronger-than-expected performance. Adjusted earnings came in at $3.13 per share, marking a 9.4% year-over-year increase, while revenue surged 14.1% to $39.7 billion, both exceeding analyst estimates. Additionally, comparable sales grew 0.8%, outperforming expectations of a 1.5% decline. Increased consumer engagement in home improvement spending, despite macroeconomic uncertainties and a high-interest-rate environment, benefited the company in the quarter.
Looking ahead, for fiscal 2025, Home Depot forecasts total sales growth of approximately 2.8%, comparable sales growth of about 1%, and plans to open 13 new stores. However, adjusted EPS is expected to decline by about 2% compared to the previous year.
HD has lagged behind its rival, Lowe's Companies, Inc.’s (LOW) 4.3% rise over the past 52 weeks but has outpaced LOW’s 1.2% decline on a six-month basis.
Despite Home Depot’s recent underperformance, analysts remain strongly optimistic about its prospects. The stock has a consensus rating of “Strong Buy” from the 36 analysts covering it, and the mean price target of $436.74 suggests an 11.9% premium to its current levels.
On the date of publication, Neharika Jain 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.
