Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
-- Home Depot
) has been reiterated by TheStreet Ratings as a buy with a ratings score of A+ . The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, revenue growth, notable return on equity and increase in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
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Highlights from the ratings report include:
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 70.79% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, HD should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- HOME DEPOT INC has improved earnings per share by 17.4% 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 $2.46 versus $2.02 in the prior year. This year, the market expects an improvement in earnings ($2.97 versus $2.46).
- Despite its growing revenue, the company underperformed as compared with the industry average of 9.6%. Since the same quarter one year prior, revenues slightly increased by 1.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Specialty Retail industry and the overall market, HOME DEPOT INC's return on equity exceeds that of both the industry average and the S&P 500.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Specialty Retail industry average. The net income increased by 12.4% when compared to the same quarter one year prior, going from $1,363.00 million to $1,532.00 million.
The Home Depot, Inc., together with its subsidiaries, operates as a home improvement retailer. The company's stores sell building materials, and home improvement and lawn and garden products to do-it-yourself, do-it-for-me (at D-I-F-M), and professional customers. The company has a P/E ratio of 20.3, above the average retail industry P/E ratio of 20 and above the S&P 500 P/E ratio of 17.7. Home Depot has a market cap of $80.8 billion and is part of the
industry. Shares are up 35.5% year to date as of the close of trading on Friday.
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--Written by a member of TheStreet Ratings Staff.