Should You Buy Home Depot Stock At $409?

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[Updated: 11/24/21] Home Depot Stock Updates

Home Depot (NYSE:HD) recently reported its third quarter report, which had revenue inline and earnings above our estimates. The company reported revenue of $36.8 billion, up 6% from the consensus estimate of $34.7 billion. The home improvement retailer’s earnings per share was $3.92, beating the consensus of $3.37 and Trefis’ estimate of $3.30. While Home Depot’s revenue grew 10% year-over-year (year-over-year), its total comparable-store sales grew 6.16% in Q3, which broke the consensus expectation of a profit of 2.2% . To add to this, comparable sales in the US were 5.5% versus +0.9% consensus. Home Depot customers increased their spending habits when they went to the store with average tickets during the quarter up 12.9% to $82.38. However, the retailer’s total transactions declined 5.5% annually to 428.2 million. On the bottom line, the company’s net earnings grew 20.3% year over year to $4.13 billion. It should be noted that unlike many companies in the retail sector, Home Depot did not dramatically uncover supply chain and labor constraints.

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We have updated our model after the Q3 release. We now forecast sales of $150.5 billion for the full year 2021, a 14% year-over-year increase, compared to our previous estimate of 9% year-over-year growth. Looking at the bottom line, we now anticipate that EPS will come in at $15.57, compared to our earlier estimate of $14.30. So far in fiscal 2021, Home Depot saw sales from professional customers surpass those of DIY customers, and we expect that trend to continue into the holiday season. In view of changes in our revenue and earnings forecasts, we have revised our Home Depot Valuations At $410 per share, based on $15.57 expected EPS and a 26.4x P/E multiplier for fiscal 2021 — roughly in line with current market prices. We believe the company’s share price is substantial at current levels.

[Updated: 11/12/21] Home Depot Q3 Pre-Earnings

Home Depot (NYSE:HD) It is scheduled to report its fiscal third quarter results on Tuesday, November 16. We expect the company’s stock to decline as its revenue and earnings fall below market expectations. In the coming quarter, the risk of an increased Delta variant outbreak could drive up costs in terms of sanitation, supply chain and labor. This in turn could reduce its net profit somewhat in the third quarter. Our forecast suggests Home Depot’s valuation is $348 per share, which is 5% below current market value. View our interactive dashboard analysis Home Depot’s pre-earnings: What to expect in Q3? for more information.

(1) Revenue is expected to be slightly below consensus estimates

Trefis estimates Home Depot’s 2021 third quarter revenue to be about $33.6 billion, slightly below the consensus estimate of $34.7 billion. While Home Depot’s Q2 revenue jumped 8% year-over-year (year-over-year) to $41.1 billion, its total comparable-store sales of 4.5% missed the consensus of 5.6%, as fewer people reported do-it-yourselfers. Visited to buy items for do-it-yourself projects. The retailer reported a 5.8% drop in customer transactions from a year ago, but the average ticket was up 11.3%. It should also be noted that the company’s US comparable sales grew by only 3.4% (missing the consensus estimate of 4.9%), and that’s far below the 30% seen in Q1. However, the company’s US comps topped rival Lowe’s’ 2% decline in comparable comps during the same period. In the first half of the fiscal year, Home Depot saw sales of professional customers outpace the DIY customer, and we expect this trend to continue into the back half of the year.

now we predict home depot revenue To be $144.3 billion for the full year 2021, up 9% year over year. Looking at the bottom line, we now anticipate EPS to come in at $14.30. The company did not provide any outlook due to the uncertainty surrounding the COVID pandemic.

2) EPS likely falls slightly short of consensus estimates

Home Depot’s Q3 2021 earnings per share is expected to be $3.30 per Trefis analysis, marginally below the consensus estimate of $3.37. In Q2, the company’s operating margin came in at an astonishing 16.1% of sales compared to 15.9% in the same period last year. Its EPS rose 13% annually to $4.53 during the period.

(3) The stock price is estimated to be slightly below the current market price

going by us Home Depot Valuations, with an EPS estimate of around $14.30 in FY21 and a P/E multiplier of 24.4x, this translates to a price of 348, which is 5% lower than the current market price.

For further comparisons between peer groups, it is helpful to see how they stack up. HD stock comparison with peers Shows how Home Depot compares against peers on count metrics.

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