The Home Depot Inc

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HD : NYSE : Services
$151.21 up 1.2 | 0.81%
Today's Range: 150.85 - 151.56
Avg. Daily Volume: 3867500.0
04/24/17 - 11:54 AM ET

Financial Analysis


HOME DEPOT INC's gross profit margin for the fourth quarter of its fiscal year 2016 is essentially unchanged when compared to the same period a year ago. The company has grown sales and net income during the past quarter when compared with the same quarter a year ago, however, it was unable to keep up with the growth of the average competitor within its industry. HOME DEPOT INC has very weak liquidity. Currently, the Quick Ratio is 0.32 which clearly shows a lack of ability to cover short-term cash needs. The company's liquidity decreased from the same period a year ago, despite already having very weak liquidity to begin with. This would indicate deteriorating cash flow.

At the same time, stockholders' equity ("net worth") has significantly decreased by 31.39% 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 Q4 FY16 Q4 FY15
Net Sales ($mil)22207.020980.0
EBITDA ($mil)3380.02987.0
EBIT ($mil)2937.02558.0
Net Income ($mil)1744.01471.0


Balance Sheet Q4 FY16 Q4 FY15
Cash & Equiv. ($mil)2538.02216.0
Total Assets ($mil)42966.042549.0
Total Debt ($mil)23601.021315.0
Equity ($mil)4333.06316.0


Profitability Q4 FY16 Q4 FY15
Gross Profit Margin34.0134.11
EBITDA Margin15.2214.23
Operating Margin13.2312.19
Sales Turnover2.22.08
Return on Assets18.5116.47
Return on Equity183.63110.97
Debt Q4 FY16 Q4 FY15
Current Ratio1.251.36
Debt/Capital0.840.77
Interest Expense246.0243.0
Interest Coverage11.9410.53


Share Data Q4 FY16 Q4 FY15
Shares outstanding (mil)1203.01252.0
Div / share0.690.59
EPS1.441.17
Book value / share3.65.04
Institutional Own % n/a n/a
Avg Daily Volume3879464.05267483.0

Valuation


BUY. HOME DEPOT INC's P/E ratio indicates a discount compared to an average of 23.42 for the Specialty Retail industry and a value on par with the S&P 500 average of 24.92. For additional comparison, its price-to-book ratio of 41.29 indicates a significant premium versus the S&P 500 average of 2.99 and a significant premium versus the industry average of 18.58. The current price-to-sales ratio is below the S&P 500 average, but above the industry average.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
HD 23.06 Peers 23.42   HD 18.29 Peers 14.39

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 significant 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 18.38 Peers 19.05   HD 2.08 Peers 1.81

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.

 

Premium. 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 premium to its peers.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
HD 41.29 Peers 18.58   HD 18.13 Peers 41.21

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.

 

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

However, HD is expected to significantly trail its peers on the basis of its earnings growth rate.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
HD 1.89 Peers 1.51   HD 6.86 Peers 7.24

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 significant premium to its industry.

 

Average. Comparing a company's sales growth to its industry helps to determine if the company is adding or losing market share.

HD is keeping pace with its peers on the basis of sales growth.

 

 

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