Home Depot’s Steady Growth Amid Market Variability
The Home Depot, Inc. (HD), based in Atlanta, Georgia, stands tall in the home improvement arena, offering a wide array of products and services for homeowners, DIY enthusiasts, and professional contractors. With a market cap of $407.4 billion, Home Depot plays a significant role in the consumer discretionary field. Their offerings range from building materials and tools to décor and appliances, catering to projects of various scales throughout North America.
Strong Performance with a Competitive Edge
Over the past year, Home Depot stock has outperformed the general market. The stock has gained 33.6%, while the broader S&P 500 Index ($SPX) witnessed a nearly 32.3% increase. However, in 2024, HD stock has risen 17.1%, trailing behind the SPX’s impressive 24.7% gain year-to-date.
Outpacing Sector Rivals
When comparing HD with the Consumer Discretionary Select Sector SPDR Fund (XLY), Home Depot continues to outshine. Over the last year, the ETF has gained 25.5%.
Impressive Quarterly Results and Future Projections
On November 12, Home Depot reported strong Q3 results that exceeded market expectations. Its revenue experienced a year-over-year growth of 6.6%, reaching $40.2 billion, surpassing analyst forecasts of $39.2 billion. Adjusted earnings per share (EPS) hit $3.78, outdoing projections by 3.4% and reflecting solid operational performance.
The company also updated its fiscal 2024 guidance, forecasting a 4% increase in total sales, boosted by an additional week in the fiscal calendar. Despite these positive results, shares declined 1.3% on the day of the earnings release but managed a rebound, gaining 1.8% the next day.
Analyst Optimism and Ratings
For the current fiscal year, ending in January 2025, analysts project Home Depot’s EPS to grow 1.1% to $15.27 on a diluted basis. Notably, the company has consistently exceeded earnings expectations, beating the consensus estimate in each of the last four quarters.
Among the 35 analysts covering HD stock, the consensus rating is a “Strong Buy.” This includes 26 “Strong Buy” recommendations, one “Moderate Buy,” and eight “Holds.”
Revised Price Targets Indicate Upside Potential
This outlook exhibits greater bullish sentiment compared to three months ago when only 22 analysts suggested a “Strong Buy.” Recently, Stifel raised Home Depot’s price target to $405 from $400, retaining a “Hold” rating following stronger-than-expected Q3 EPS, driven by improved sales and gross margins.
The mean price target now stands at $420.94, indicating a 3.8% premium to HD’s current stock price. The highest price target among analysts, set at $466, suggests a potential upside of 14.9% from current levels.
On the date of publication, Rashmi Kumari did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
