Home Depot Inc. Stock Buy Recommendation Reiterated (HD)

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 ( TheStreet) -- Home Depot (NYSE: HD) 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 impressive record of earnings per share growth, compelling growth in net income, revenue growth, notable return on equity and good cash flow from operations. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass

Highlights from the ratings report include:
  • HOME DEPOT INC has improved earnings per share by 36.0% 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 $3.00 versus $2.46 in the prior year. This year, the market expects an improvement in earnings ($3.51 versus $3.00).
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Specialty Retail industry average. The net income increased by 31.9% when compared to the same quarter one year prior, rising from $774.00 million to $1,021.00 million.
  • HD's revenue growth trails the industry average of 26.2%. Since the same quarter one year prior, revenues rose by 13.9%. 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. When compared to other companies in the Specialty Retail industry and the overall market, HOME DEPOT INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • Net operating cash flow has significantly increased by 65.72% to $1,591.00 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 42.92%.

The Home Depot, Inc. operates as a home improvement retailer. Home Depot has a market cap of $109.1 billion and is part of the services sector and retail industry. The company has a P/E ratio of 25.00, above the S&P 500 P/E ratio of 18.00. Shares are up 16.8% year to date as of the close of trading on Monday.

You can view the full Home Depot Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

Exclusive Offer: Jim Cramer's 'go-to' small/mid-cap guru Bryan Ashenberg only buys stocks he thinks could return 50-100%. See his top picks for 14-days FREE.
null

If you liked this article you might like

Irma and Harvey Busted Algos; Probably Done Deals Under Trump: Best of Cramer

Lowe's Predictable Plateaus

This Is How to Avoid Becoming Amazon Roadkill

These Stocks Pay You to Own Them

Cramer: Dominoes Are in Play Today