The Home Depot Inc

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HD : NYSE : Services
$138.54 up 0.58 | 0.42%
Today's Range: 137.44 - 138.65
Avg. Daily Volume: 4,882,300
07/29/16 - 12:45 PM ET

Financial Analysis


HOME DEPOT INC's gross profit margin for the first quarter of its fiscal year 2016 is essentially unchanged when compared to the same period a year ago. The company managed to grow both sales and net income at a faster pace than the average competitor in its industry this quarter as compared to the same quarter a year ago. HOME DEPOT INC has very weak liquidity. Currently, the Quick Ratio is 0.35 which clearly shows a lack of ability to cover short-term cash needs. The company's liquidity has increased from the same period last year, indicating improving cash flow.

At the same time, stockholders' equity ("net worth") has significantly decreased by 31.17% from the same quarter last year. The key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the near future.

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Income Statement Q1 FY16 Q1 FY15
Net Sales ($mil)22762.020891.0
EBITDA ($mil)3512.03023.0
EBIT ($mil)3079.02604.0
Net Income ($mil)1803.01579.0


Balance Sheet Q1 FY16 Q1 FY15
Cash & Equiv. ($mil)3257.02827.0
Total Assets ($mil)44576.042510.0
Total Debt ($mil)20948.016872.0
Equity ($mil)6335.09204.0


Profitability Q1 FY16 Q1 FY15
Gross Profit Margin34.2334.36
EBITDA Margin15.4214.47
Operating Margin13.5312.46
Sales Turnover2.031.98
Return on Assets16.2215.39
Return on Equity114.1771.11
Debt Q1 FY16 Q1 FY15
Current Ratio1.251.06
Debt/Capital0.770.65
Interest Expense244.0197.0
Interest Coverage12.6213.22


Share Data Q1 FY16 Q1 FY15
Shares outstanding (mil)1245.01299.0
Div / share0.690.59
EPS1.441.21
Book value / share5.097.09
Institutional Own % n/a n/a
Avg Daily Volume4923845.05077544.0

Valuation


BUY. HOME DEPOT INC's P/E ratio indicates a discount compared to an average of 24.35 for the Specialty Retail industry and a value on par with the S&P 500 average of 25.05. For additional comparison, its price-to-book ratio of 26.74 indicates a significant premium versus the S&P 500 average of 2.81 and a significant premium versus the industry average of 13.96. The current price-to-sales ratio is similar to the S&P 500 average, but it is above the industry average, indicating a premium.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
HD 23.91 Peers 24.35   HD 17.48 Peers 15.74

Average. An average P/E ratio can signify an industry neutral price for a stock and an average growth expectation.

HD is trading at a valuation on par with its peers.

 

Premium. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

HD is trading at a premium to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
HD 19.05 Peers 20.26   HD 1.55 Peers 2.04

Average. An average price-to-projected earnings ratio can signify an industry neutral stock price and average future growth expectations.

HD is trading at a valuation on par with its peers.

 

Discount. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

HD trades at a discount to its peers.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
HD 26.74 Peers 13.96   HD 15.41 Peers -3.13

Premium. A higher price-to-book ratio makes a stock less attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

HD is trading at a significant premium to its peers.

 

Higher. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

HD is expected to have an earnings growth rate that significantly exceeds its peers.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
HD 1.87 Peers 1.56   HD 7.12 Peers 8.06

Premium. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

HD is trading at a premium to its industry on this measurement.

 

Lower. A sales growth rate that trails the industry implies that a company is losing market share.

HD trails its peers on the basis of sales growth

 

 

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