NEW YORK ( TheStreet) -- Home Depot ( HD) is makeing disaster investment efforts this year such as its nationwide water effort to help educate and enable residents in drought-affected areas. The specialty retail company stock rose 5%, to $81.50 in midday trading and closed down slightly at $80.98. Home Depot is expected to reach a $1.88 annual dividend per share for this year.
Many of the company's several disaster preparedness initiatives such as its water conservation workshops could spur sales growth and contribute to home improvement recovery.
According to PWC, 20 of the 30 most costly insured catastrophes worldwide from 1970 to 2011 have occurred since 2001. With the exception of the 9/11 terrorist attacks, they were all natural disasters.
"We rate HOME DEPOT INC (HD) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, impressive record of earnings per share growth, increase in net income and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- HD's revenue growth has slightly outpaced the industry average of 0.6%. Since the same quarter one year prior, revenues slightly increased by 2.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- HOME DEPOT INC has improved earnings per share by 20.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, HOME DEPOT INC increased its bottom line by earning $3.75 versus $3.00 in the prior year. This year, the market expects an improvement in earnings ($4.42 versus $3.75).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Specialty Retail industry average. The net income increased by 12.5% when compared to the same quarter one year prior, going from $1,226.00 million to $1,379.00 million.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Specialty Retail industry and the overall market, HOME DEPOT INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- In its most recent trading session, HD has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- You can view the full analysis from the report here: HD Ratings Report