The Home Depot Inc. (HD): What Does Valuation Ratios Tell Us?

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BEPC Stock

The Home Depot Inc. (NYSE:HD) saw an upside of 0.70% to close Tuesday at $317.69 after adding $2.21 on the day. The 5-day average trading volume is 3,480,420 shares of the company’s common stock. It has gained $334.52 in the past week and touched a new high 1 time within the past 5 days. An average of 2,891,920 shares of the company has been traded in the last 20 days, and the 50-day average volume stands at 4,163,400.

HD’s 1-month performance is -0.52% or -$1.04 on its low of $307.39 reached on 01/20/23. The company’s shares have touched a 52-week low of $264.51 and high of $374.67, with the stock’s rally to the 52-week high happening on 01/17/23. YTD, HD has achieved 0.58% or $1.83 and has reached a new high 7 times. However, the current price is down -15.21% from the 52-week high price.

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Insider Transactions

HD stock investors last saw insider trading activity on Nov 18.KINNAIRD JEFFREY G (EVP – Merchandising) most recently sold 6,403 shares at $311.65 per share on Nov 18. This transaction cost the insider $1,995,495. EVP and CIO, Siddiqui Fahim, sold 2,000 shares at a price of $311.29 on Nov 17. Then, on Nov 17, EVP – U.S. Stores & Int’l Ops Campbell Ann Marie sold 230 shares at a price of $310.79 per share. This transaction amounted to $71,482.

Valuation Metrics

HD stock has a beta of 0.94. Moving on to other valuation ratios, the trailing price-to-sales (P/S) ratio is 2.03 while the price-to-book (PB) in the most recent quarter is 250.15, with the price to cash flow ratio at 123.67.

The Home Depot Inc.’s quick ratio for the period ended July 30 was 0.30, with the current ratio over the same period at 1.40. As well, the company’s long term debt to equity for the quarter ending July 30 was 32.16, while the total debt to equity was 33.10.. In terms of profitability, the gross margin trailing 12 months is 33.50%. The firm’s gross profit as reported stood at $50.83 billion against revenue of $151.16 billion.

Earnings Surprise

For the quarterly period ending July 30 this year, Net income and sales went down compared to those figures reported in the previous quarter. Net income grew 4.84% to $4.34 billion, while revenue of $5.17 billion was -19.22% off the previous quarter. Analysts expected HD to announce $4.94 per share in earnings in its latest quarter, but it posted $5.05, representing a 2.20% surprise. EBITDA for the quarter stood at more than $6.89 billion. HD stock balance sheet for the quarter ending July 30 shows that total liabilities totaled 75.57 billion, with total debt at $47.91 billion. Shareholders hold equity totaling $1.02 billion.

Let’s look briefly at The Home Depot Inc. (HD) price momentum from a technical analysis perspective. The 9-day relative strength index as at close on 24 January was 46.25% to suggest the stock is trending Neutral, with historical volatility in this time period at 27.97%.

The stock’s 5-day moving average is $316.55, reflecting a -3.00% or -$9.84 change from its current price. HD is currently trading +0.50% above its 20-day SMA, +8.39% above its 100-day SMA. However, the stock’s current price level is away from the SMA50 by +10.79% and SMA200 by+6.41%.

Stochastic %K and %D was 31.21% and 27.56% and the average true range (ATR) pointed at 7.73. The RSI (14) points at 48.20%, while the 14-day stochastic is at 37.09% with the period’s ATR at 7.77. The stock’s 9-day MACD Oscillator is pointing at -6.20 and -4.77 on the 14-day charts.

Analyst Ratings

Analysts offering their rating for HD stock have a consensus rating for the stock as Overweight. Currently, 1 brokerage advisors rate HD as a “sell,”, while 13 advise that investors “Hold.” 1 analysts have rated the stock as underweight. 4 rates the stock as overweight while 16 have offered a “buy” rating.

What is HD’s price target for the next 12 months?

Analysts have a consensus price target ranging from a low of $258.00 and a high of $400.00, with their median price target at $343.00. Looking at these predictions, the average price target given by analysts is for The Home Depot Inc. (HD) stock is $340.62.

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