HDHD
US • CONSUMER CYCLICAL
$332.98
P/E
23.66
PEG
1.87
FCF Yield
4.3%
Rev Growth YoY
+4.8% YoY
Gross Margin
33.1%
Health Score
6/10
D/E Ratio
4.35
Confidence
MEDIUM
Business Snapshot
Home Depot operates as a home improvement retailer, generating revenue primarily through the sale of building materials, tools, appliances, and related services to both do-it-yourself customers and professional contractors. The company operates within the highly competitive home improvement retail market, maintaining a dominant position as the largest player in the United States with a vast network of physical stores and an integrated e-commerce platform. With a market capitalisation of $337.89B, Home Depot is a large-cap company that generated $166.59B in trailing twelve-month revenue, reflecting its massive financial scale. A defining characteristic is its deep competitive moat built on extensive real estate footprint, supply chain efficiency, and strong vendor relationships, creating high barriers to entry in a capital-intensive industry.
Financial Health
Home Depot's gross margin stands at 33.1%, though a prior-year comparison is unavailable to determine direction, while its net margin of 8.4% reflects the thin profitability typical of high-volume retail operations. The balance sheet shows significant strain, with a debt-to-equity ratio of 4.35x, indicating high leverage, though this is somewhat offset by a current ratio of 1.06x, suggesting adequate short-term liquidity...
Risk Assessment
- DEBT — Debt/equity of 4.35x indicates a highly leveraged balance sheet, limiting financial flexibility and increasing vulnerability to rising interest rates.
- EARNINGS QUALITY — Only 1 out of 4 recent quarters beat earnings estimates, suggesting low guidance credibility and potential for negative earnings surprises.
- TECHNICALS — Price is below the 200-day moving average ($350.5), indicating an established downtrend.
- 52-WEEK POSITION — At $332.98, the stock is 20.4% below its 52-week high of $418.06 and near the lower half of its range, reflecting downward price momentum from recent highs.
- VALUATION DIVERGENCE — The current price of $332.98 represents an 18.5% premium to the Python DCF estimate of $280.98, implying the market is pricing in growth expectations beyond the model's assumptions....
Home Depot's gross margin stands at 33.1%, though a prior-year comparison is unavailable to determine direction, while its net margin of 8.4% reflects the thin profitability typical of high-volume retail operations. The balance sheet shows significant strain, with a debt-to-equity ratio of 4.35x, indicating high leverage, though this is somewhat offset by a current ratio of 1.06x, suggesting adequate short-term liquidity. The company generates substantial free cash flow of $14.37B, translating to a healthy free cash flow yield of 4.3%, demonstrating strong cash-generating capabilities. Overall, Home Depot's financial health is a mixed picture — exceptionally strong cash flows support dividend payments and reinvestment, but the high debt load introduces financial risk that requires vigilant monitoring.
- DEBT — Debt/equity of 4.35x indicates a highly leveraged balance sheet, limiting financial flexibility and increasing vulnerability to rising interest rates. - EARNINGS QUALITY — Only 1 out of 4 recent quarters beat earnings estimates, suggesting low guidance credibility and potential for negative earnings surprises. - TECHNICALS — Price is below the 200-day moving average ($350.5), indicating an established downtrend. - 52-WEEK POSITION — At $332.98, the stock is 20.4% below its 52-week high of $418.06 and near the lower half of its range, reflecting downward price momentum from recent highs. - VALUATION DIVERGENCE — The current price of $332.98 represents an 18.5% premium to the Python DCF estimate of $280.98, implying the market is pricing in growth expectations beyond the model's assumptions.
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