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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
The Home Depot, Inc. (XNYS:HD) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
HD
Name:
THE HOME DEPOT, INC. (XNYS:HD)
Sector:
5.79B
Industry:
Home Improvement Retail
CEO:
Mr. Craig Menear
Total Employees:
490,600
Our Technological Advancement Rating
Our Rating:
A
Technological advancement compared to industry is 125.51% higher
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF THE HOME DEPOT, INC.(HD) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND HOME IMPROVEMENT RETAIL INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
291.9
One Month Price Target:
$293.51
Six Month Price Target :
$301.57
Likely Price in One Year's Time:
Ticker:
$311.24
Likely Trading Range Today Under (Normal Volatility)
$291.07
Price Upper limit ($) :
$293.13
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$279.66
This week:
$264.53
This month :
$237.15
Other Primary facts
Market Cap:
298.83B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
1.02B
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
13.75%
-19.79%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$348.67
$322.41
$235.13
$261.39
Medium risk (<10%) entry points
Buy Call
Sell Call
$313.87
Buy Put:
Sell Put:
$308.26
$269.86
$275.54
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
HD
Sharpe Ratio:
2.88%
Comparison:
HD, is amongst the top 40% stocks with highest risk-adjusted returns
Sharpe ratio is -12.43% lower than the industry
& ratio is 26.17% higher than the market/S&P 500 average
Average Returns/Yield of
HD
Daily returns:
0.07%
Weekly returns:
0.34%
Monthly returns:
1.37%
Yearly returns:
28.57%
Comparison of returns:
Average annual returns/yield (last 3 years) is -42.43% below industry average
Classification:
HD, is amongst the top 40% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.36
Statistical test of Returns:
HD has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.08%
Weekly Volatility:
4.64%
Monthly Volatility:
9.28%
Yearly Volatility:
32.15%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
1.46%
Volatility in last five trading days has been -29.69% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-4.19%
Weekly VaR:
-9.38%
Monthly VaR:
-18.75%
How Much Can the price of
HD
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-16%
Worst case (decline):
-64.97%
This translates to price declining to:
$245.78
This translates to price declining to:
$102.26
Severe Crash Probability
Risk of crash in next 6/12 months: High (50-70%)
What is Value at Risk (VaR)?
Risk Fundamentals
HD is a 32.37% riskier investment compared to the market/S&P 500 & is 13.40% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -40.43% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
HD
Beta in relation to market/S&P 500--0.99
Expected beta in 1 year's time:
0.821
Expected beta in 3 year's time:
1.162
Unlevered (debt free) Beta:
0.054
Beta in relation to Nasdaq (XNAS):
0.813
Beta in relation to all global stocks::
0.818
Beta Comparison & Analysis
Beta of competitors/peers::
0.991
Beta is -0.57% lower than peers
Average Industry Beta:
1.77
Beta is -44.31% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
452.61%
Sustainable growth rate is -90.59% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.065
Alpha is -50.77% below industry average alpha yield
Alpha is 417% higher than market/& is unsustainably high
Analysis of Cost of Capital of
HD
Equity cost of capital:
0.099
Equity cost of capital is -35.17% below industry mean WACC
Unlevered (without debt) cost of capital:
0.54%
Before-tax cost of debt:
3.29%
After-tax cost of debt:
2.60%
Overall debt rating:
High AA grade (second highest grade)
Weighted average cost of capital (WACC):
2.60%
WACC is -45.28% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$149.03
Revenue growth rate per share of (3Y):
170.95
Annual revenue growth rate is -69.36% below industry average
EPS:
$15.75
Expected Annual growth rate of EPS (3Y):
16.67%
Expected future EPS growth rate is -88.23% lower than the Home Improvement Retail industry
Free cash flow (FCF) per share:
$10.79
Balance sheet equity growth per share: 67.99%
Equity growth rate per share is 192.09% higher than the industry
Debt per share
$39.05
EBITDA per share
$25.51
Valuation Analysis Today of
HD
P/E Ratio:
17.94
P/E Ratio of Competitors/Peers:
22.26
P/E ratio is -19.41% lower than main peers & is -29.58% lower than the industry
Stock price/value with industry average P/E ratio: $401.15
HD is -27.23% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $132.00
Present value of the expected future dividends only: $115.54
P/S (Price to Sales ratio):
1.96
Price to sales ratio is -10.99% below the industry mean
P/B (Price to book value ratio):
170.95
Price to free cash flow: 27.06
-
Net income growth rate (3Y):
63.52%
Net income growth rate is -53.48% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 10.75%
Dividend yeild: 2.43%
Previous Dividend: $1.90
Previous adjusted dividend: $1.90
Previous Dividend: $7.10
Expected next dividend best case: $2.04
Expected next dividend worst case: $1.76
Average dividend payment (long-term): $1.61
Average dividend increase/decrease (growth rate) % per period: 3.54%
Expected next dividend payment date: 14/09/2022
Expected next dividend record date: 31/08/2022
-
Previous dividend payment date: 16/06/2022
Previous dividend record date: 06/02/2022
-
Dividend History:
2022-06-01--$1.90
2021-12-01--$1.65
2021-06-02--$1.65
2022-03-09--$1.90
2021-09-01--$1.65
2021-03-10--$1.65
Dividend growth rate is -9.64% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
2286.96%
Net debt to equity ratio:
2019.16%
Debt to assets ratio:
55.09%
Net debt to assets ratio:
48.64%
Debt-to-asset ratio is -36.84% below industry average
Ability to repay debt:
Interest coverage ratio:
18.92
Interest coverage ratio is -91.15% less than industry average
Looking forward:
Debt growth rate:
17.81%
Annual debt growth is -96% lower than industry average debt growth rate
Debt repayment rate in last quarter: 3.36%
Analysis of Key Statistics
Correlation of price movement with the market:
0.771
Statistical significance of correlation:
HD has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.656
Stock price is 17.52% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.656
Correlation of price movement with Nasdaq (^IXIC):
-0.004
Covariance of price movement with the market:
-0.005
Kurtosis
17.592
Returns have severe fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are considerably more likely, compared to assets with normally distributed returns
Skewness of returns:
-1.267
Returns are left (negative) skewed; mean returns are lower than median and mode returns
Fundamental Analysis & Dupont Analysis of
HD
Gross Profit Margin Ratio:
134%
Operating Profit Margin Ratio:
15.20%
Operating profit margin is 75.32% higher than the industry
Net Profit Margin Ratio:
134%
Effective Tax Rate:
24.39%
Effective tax rate is 6.30% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
945.02%
Return on equity (ROE) is -81.72% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
22.76%
Return on assets (ROA) is 67.74% higher than the industry
Financial Leverage:
2.2x
Current Ratio:
1.1
Current ratio is -35.41% below industry average
Cash Conversion Cycle (days):
-20.9
Cash conversion cycle is -128.89% below industry average
The remaining useful life of property plant & equipment is: 17.7 years
Stock based compensation to net income ratio:
0.88%
In-depth Efficiency Analysis
Revenue generated per employee:
311.0K
Each employee generates -35% less revenue than industry average revenue per employee
EBITDA generated per employee:
53.2K
Each employee generates 4% more EBITDA than industry average revenue per employee
Profit generated per employee:
33.7K
Each employee generates 30% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
11.8K
Each employee generates 3304% more free cash flow than industry average revenue per employee
Assets/Capital per employee
85.4K
Each employee generates 3304% more free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
HD
Alibaba Group Holding Limited (XNYS:BABA)
THE WALT DISNEY COMPANY (XNYS:DIS)
TOYOTA MOTOR CORPORATION (XNYS:TM)
MCDONALD'S CORPORATION (XNYS:MCD)
LOWE'S COMPANIES, INC. (XNYS:LOW)
FORD MOTOR COMPANY (XNYS:F)
GENERAL MOTORS COMPANY (XNYS:GM)
THE TJX COMPANIES, INC. (XNYS:TJX)
Stellantis NV (XNYS:STLA)
Current Analyst Ratings
Strong buy�50%
Buy�50%
Hold�38%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Strong buy
Income Statement
Period:
TTM
Date:
5/1/22
Revenue:
152.57B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
101.33B
51.24B
-
-
25.64B
-
2.41B
28.05B
41.00M
1.38B
2.89B
26.12B
23.19B
16.52B
21.85B
5.33B
16.52B
Statement of Cash Flow
Date:
Period:
703.00M
Differed Income Tax :
-
Stock Based Compensation :
146.00M
Change in Working Capital :
1.21B
Accounts Receivables:
-
Other Working Capital:
499.00M
Other Non-Cash Items:
102.00M
Net Cash Provided by Operating Activities:
6.31B
Investments in PP&E:
-
Net Acquisitions:
-
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
5/2/21
2022
Q1
6.65B
-
6.65B
3.62B
19.18B
1.22B
30.67B
30.54B
7.14B
-
-
-
4.22B
41.90B
-
72.57B
14.49B
1.97B
1.15B
3.42B
7.88B
27.76B
39.98B
3.09B
43.06B
-
70.82B
90.00M
60.50B
- 608000.0K
- 58238000.00K
May 2, 2021 at 6:00:00 AM
129.38B
1.75B
72.57B
-
41.94B
35.3B
-
- 528000.00K
- 528000.00K
- 1390000.00K
13.00M
- 3788000.00K
- 1775000.00K
- 130000.00K
- 7070000.00K
41.00M
- 1247000.00K
6.65B
7.90B
6.31B
- 524000.00K
5.79B
Our Proprietary Portfolio Rating
Our Rating:
B
Price Forecast/Expected Price in Next 5 Years of
HD
2023
2024
2025
2026
2027
$379.17
$404.29
$431.07
$459.63
$490.08