February 28, 2016
NYSE: HD
HOME DEPOT INC
BUY
A+
A
A-
HOLD
B+
B
Annual Dividend Rate
$2.36
B-
C+
C
Annual Dividend Yield
1.86%
SELL
C-
D+
D
Beta
0.90
Sector: Consumer Goods & Svcs
Weekly Price: (US$)
HD BUSINESS DESCRIPTION
The Home Depot, Inc. operates as a home
improvement retailer.
D-
E+
E
E-
F
Market Capitalization
$160.8 Billion
BUY
52-Week Range
$92.17-$135.47
Sub-Industry: Home Improvement Retail
SMA (50)
RATING SINCE
TARGET PRICE
05/19/2010
$166.50
Price as of 2/25/2016
$126.86
Source: S&P
SMA (100)
1 Year
2 Years
170
TARGET
PRICE
$166.50
TARGET
TARGETPRICE
PRICE$166.50
$166.50
TARGET
PRICE
$166.50
160
150
STOCK PERFORMANCE (%)
3 Mo.
Price Change
-5.79
1 Yr.
9.07
140
3 Yr (Ann)
25.67
130
120
GROWTH (%)
110
Last Qtr
9.48
6.67
11.42
Revenues
Net Income
EPS
12 Mo.
6.42
10.46
15.67
3 Yr CAGR
5.79
15.62
22.09
100
90
80
70
RETURN ON EQUITY (%)
Rating History
HD
110.97
68.06
43.00
Q4 2015
Q4 2014
Q4 2013
Ind Avg
45.80
240.49
24.31
S&P 500
12.28
14.59
13.97
BUY
Volume in Millions
60
40
20
P/E COMPARISON
2014
2015
0
2016
COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History
23.23
27.13
21.53
HD
Ind Avg
S&P 500
RECOMMENDATION
We rate HOME DEPOT INC (HD) a BUY. This is based on the convergence of positive investment measures,
which should help this stock outperform the majority of stocks that we rate. The company's strengths can be
seen in multiple areas, such as its revenue growth, notable return on equity, solid stock price performance,
growth in earnings per share and increase in net income. We feel its strengths outweigh the fact that the
company has had generally high debt management risk by most measures that we evaluated.
HIGHLIGHTS
HD's revenue growth has slightly outpaced the industry average of 7.0%. Since the same quarter one year
prior, revenues slightly increased by 9.5%. Growth in the company's revenue appears to have helped boost
the earnings per share.
2013
2014
Q4 1.17
Q3 1.35
Q2 1.73
Q1 1.21
Q4 1.05
Q3 1.15
Q2 1.52
Q1 1.00
Q4 0.73
Q3 0.95
Q2 1.24
Q1 0.83
EPS ANALYSIS¹ ($)
2015
NA = not available NM = not meaningful
1 Compustat fiscal year convention is used for all fundamental
data items.
The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting
the earnings growth and other positive factors similar to those we have cited here. Turning our attention to
the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down
market. However, in any other environment, this stock still has good upside potential despite the fact that it
has already risen in the past year.
HOME DEPOT INC has improved earnings per share by 11.4% 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 $5.46 versus $4.72 in the prior year. This year, the market expects an
improvement in earnings ($6.20 versus $5.46).
The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the
Specialty Retail industry average. The net income increased by 6.7% when compared to the same quarter one
year prior, going from $1,379.00 million to $1,471.00 million.
The company's current return on equity greatly increased when compared to its ROE from the same quarter
one year prior. This is a signal of significant strength within the corporation. Compared to other companies in
the Specialty Retail industry and the overall market, HOME DEPOT INC's return on equity significantly
exceeds that of both the industry average and the S&P 500.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 1
February 28, 2016
NYSE: HD
HOME DEPOT INC
Sector: Consumer Goods & Svcs Home Improvement Retail Source: S&P
Annual Dividend Rate
$2.36
Annual Dividend Yield
1.86%
PEER GROUP ANALYSIS
20%
REVENUE GROWTH AND EBITDA MARGIN*
AAN
AEO
INDUSTRY ANALYSIS
The specialty retail industry includes very well-known home improvement, apparel, automotive, and other
narrow-focus stores such as Home Depot (HD), TJX Companies (TJX), Lowe’s Companies (LOW), Gap (GPS),
Bed Bath & Beyond (BBBY), Ross Stores (ROST), Limited Brands (LTD), O’Reilly Automotive (ORLY), PetSmart
(PETM), Carmax (KMX), and Build-A-Bear Workshop (BBW).
Companies in this industry are judged based on the metric of same-store sales, a measurement that shows if
stores open for more than one year are increasing top line revenue or shrinking.
UN
R
VO
FA
LE
AB
-15%
Price as of 2/25/2016
$126.86
Some of the larger specialty retail companies also profit from the extension of credit to their customers with
branded credit cards.
LL SHOS
BKS
ARCI
52-Week Range
$92.17-$135.47
The variety of product focuses targeted by specialty retail companies is very diverse. These include but are
not limited to home improvement goods, pharmaceutical & beauty, shoes, electronics, and office supplies.
Also included are stores narrowly focused on music, books, wine, games, rentals, vitamins, lumber, sporting
goods, toys, jewelry, and fashion apparel for men, women, and teddy bears.
LE
HD
LOW
Revenue Growth (TTM)
AB
OR
AN
Market Capitalization
$160.8 Billion
V
FA
TTS
Beta
0.90
ANF
-5%
45%
EBITDA Margin (TTM)
Companies with higher EBITDA margins and
revenue growth rates are outperforming companies
with lower EBITDA margins and revenue growth
rates. Companies for this scatter plot have a market
capitalization between $5.1 Million and $160.8
Billion. Companies with NA or NM values do not
appear.
*EBITDA – Earnings Before Interest, Taxes, Depreciation and
Amortization.
20%
REVENUE GROWTH AND EARNINGS YIELD
AAN
V
FA
AB
OR
TTS
PEER GROUP: Specialty Retail
Ticker
HD
BKS
TTS
LOW
AN
ARCI
LL
AEO
ANF
AAN
SHOS
Recent
Company Name
Price ($)
HOME DEPOT INC
126.86
BARNES & NOBLE INC
9.12
TILE SHOP HOLDINGS INC
13.13
LOWE'S COMPANIES INC
68.70
AUTONATION INC
51.94
APPLIANCE RECYCLING CTR AMER 0.86
LUMBER LIQUIDATORS HLDGS INC 11.24
AMERN EAGLE OUTFITTERS INC
14.92
ABERCROMBIE & FITCH
28.20
AARON'S INC
22.81
SEARS HOMETOWN & OUTLET STR 6.66
Market
Cap ($M)
160,843
697
675
62,517
5,569
5
304
2,904
1,895
1,656
151
Price/
Earnings
23.23
NM
43.77
25.35
13.35
NM
NM
14.49
90.97
12.20
NM
Net Sales
TTM ($M)
88,519.00
5,018.44
292.99
59,074.00
20,862.00
117.59
1,015.95
3,487.87
3,525.29
3,179.76
2,311.86
Net Income
TTM ($M)
7,009.00
-21.35
15.70
2,546.00
442.60
-2.48
-19.26
198.04
22.22
135.71
-4.79
The peer group comparison is based on Major Home Improvement Retail companies of comparable size.
LE
LL
SHOS BKS
R
VO
FA
ARCI
LE
AB
-15%
UN
Revenue Growth (TTM)
AN
AEOHD
LOW
-50%
ANF
10%
Earnings Yield (TTM)
Companies that exhibit both a high earnings yield
and high revenue growth are generally more
attractive than companies with low revenue growth
and low earnings yield. Companies for this scatter
plot have revenue growth rates between -10.9% and
18%. Companies with NA or NM values do not
appear.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 2
February 28, 2016
NYSE: HD
HOME DEPOT INC
Sector: Consumer Goods & Svcs Home Improvement Retail Source: S&P
Annual Dividend Rate
$2.36
Annual Dividend Yield
1.86%
COMPANY DESCRIPTION
The Home Depot, Inc. operates as a home improvement
retailer. It operates The Home Depot stores that sell
various building materials, home improvement products,
and lawn and garden products, as well as provide
installation, home maintenance, and professional service
programs to do-it-yourself, do-it-for-me, and professional
customers. The company offers installation programs
that include flooring, cabinets, countertops, water
heaters, and sheds; and professional installation in
various categories sold through its in-home sales
programs, such as roofing, siding, windows, kitchen and
bath refacing, furnaces, and central air systems, as well
as act as a contractor to provide installation services to
its do-it-for-me customers through third-party installers.
It primarily serves professional remodelers, general
contractors, repairmen, small business owners, and
tradesmen. The company also sells its products through
online. As of the September 18, 2015, the company had
2,270 stores located in 50 states in the United States,
the District of Columbia, Puerto Rico, U.S. Virgin Islands,
Guam, Canada, and Mexico. The Home Depot, Inc. was
founded in 1978 and is based in Atlanta, Georgia.
HOME DEPOT INC
2455 Paces Ferry Road, NW
Atlanta, GA 30339
USA
Phone: 770-433-8211
http://www.homedepot.com
Employees: 385000
Beta
0.90
Market Capitalization
$160.8 Billion
52-Week Range
$92.17-$135.47
Price as of 2/25/2016
$126.86
STOCK-AT-A-GLANCE
Below is a summary of the major fundamental and technical factors we consider when determining our
overall recommendation of HD shares. It is provided in order to give you a deeper understanding of our rating
methodology as well as to paint a more complete picture of a stock's strengths and weaknesses. It is
important to note, however, that these factors only tell part of the story. To gain an even more comprehensive
understanding of our stance on the stock, these factors must be assessed in combination with the stock’s
valuation. Please refer to our Valuation section on page 5 for further information.
FACTOR
SCORE
5.0
Growth
out of 5 stars
weak
Measures the growth of both the company's income statement and
cash flow. On this factor, HD has a growth score better than 90% of the
stocks we rate.
strong
4.5
Total Return
out of 5 stars
weak
Measures the historical price movement of the stock. The stock
performance of this company has beaten 80% of the companies we
cover.
strong
5.0
Efficiency
out of 5 stars
weak
Measures the strength and historic growth of a company's return on
invested capital. The company has generated more income per dollar of
capital than 90% of the companies we review.
strong
5.0
Price volatility
out of 5 stars
weak
Measures the volatility of the company's stock price historically. The
stock is less volatile than 90% of the stocks we monitor.
strong
3.0
Solvency
out of 5 stars
weak
Measures the solvency of the company based on several ratios. The
company is more solvent than 50% of the companies we analyze.
strong
3.5
Income
out of 5 stars
weak
Measures dividend yield and payouts to shareholders. The company's
dividend is higher than 60% of the companies we track.
strong
THESTREET RATINGS RESEARCH METHODOLOGY
TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both
price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to
perform against a general benchmark of the equities market and interest rates. While our model is
quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include
expected equities market returns, future interest rates, implied industry outlook and forecasted company
earnings. Objective elements include volatility of past operating revenues, financial strength, and company
cash flows.
Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown
as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of
acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings
growth; and the financial strength of the underlying company as compared to its stock's valuation as
compared to projected earnings growth; and the financial strength of the underlying company as compared
to its stock's performance. These and many more derived observations are then combined, ranked, weighted,
and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of
selecting stocks.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 3
February 28, 2016
NYSE: HD
HOME DEPOT INC
Sector: Consumer Goods & Svcs Home Improvement Retail Source: S&P
Annual Dividend Rate
$2.36
Annual Dividend Yield
1.86%
Consensus EPS Estimates² ($)
IBES consensus estimates are provided by Thomson Financial
1.33
6.20 E
7.02 E
Q1 FY16
2017(E)
2018(E)
Market Capitalization
$160.8 Billion
52-Week Range
$92.17-$135.47
Price as of 2/25/2016
$126.86
FINANCIAL ANALYSIS
HOME DEPOT INC's gross profit margin for the fourth quarter of its fiscal year 2015 is essentially unchanged
when compared to the same period a year ago. The company managed to grow both sales and net income at
a faster pace than the average competitor in its industry this quarter as compared to the same quarter a year
ago. HOME DEPOT INC has very weak liquidity. Currently, the Quick Ratio is 0.26 which clearly shows a lack
of ability to cover short-term cash needs. The company's liquidity has decreased from the same period last
year.
At the same time, stockholders' equity ("net worth") has significantly decreased by 32.24% from the same
quarter last year. The key liquidity measurements indicate that the company is in a position in which financial
difficulties could develop in the near future.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the
next 12-months. To learn more visit www.TheStreetRatings.com.
INCOME STATEMENT
Net Sales ($mil)
EBITDA ($mil)
EBIT ($mil)
Net Income ($mil)
Beta
0.90
Q4 FY15
20,980.00
2,987.00
2,558.00
1,471.00
Q4 FY14
19,162.00
2,600.00
2,196.00
1,379.00
Q4 FY15
2,216.00
42,549.00
21,315.00
6,316.00
Q4 FY14
1,723.00
39,946.00
17,197.00
9,322.00
Q4 FY15
34.11%
14.23%
12.19%
2.08
16.47%
110.97%
Q4 FY14
34.35%
13.56%
11.46%
2.08
15.88%
68.06%
Q4 FY15
1.10
0.77
NA
NA
Q4 FY14
1.36
0.65
213.00
10.31
Q4 FY15
1,268
0.59
1.17
4.98
NA
6,286,188
Q4 FY14
1,307
0.47
1.05
7.13
NA
5,206,812
BALANCE SHEET
Cash & Equiv. ($mil)
Total Assets ($mil)
Total Debt ($mil)
Equity ($mil)
PROFITABILITY
Gross Profit Margin
EBITDA Margin
Operating Margin
Sales Turnover
Return on Assets
Return on Equity
DEBT
Current Ratio
Debt/Capital
Interest Expense
Interest Coverage
SHARE DATA
Shares outstanding (mil)
Div / share
EPS
Book value / share
Institutional Own %
Avg Daily Volume
2 Sum of quarterly figures may not match annual estimates due to
use of median consensus estimates.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 4
February 28, 2016
NYSE: HD
HOME DEPOT INC
Sector: Consumer Goods & Svcs Home Improvement Retail Source: S&P
Annual Dividend Rate
$2.36
Annual Dividend Yield
1.86%
Beta
0.90
Market Capitalization
$160.8 Billion
52-Week Range
$92.17-$135.47
Price as of 2/25/2016
$126.86
RATINGS HISTORY
Our rating for HOME DEPOT INC has not changed
since 5/19/2010. As of 2/25/2016, the stock was
trading at a price of $126.86 which is 6.4% below its
52-week high of $135.47 and 37.6% above its
52-week low of $92.17.
VALUATION
BUY. HOME DEPOT INC's P/E ratio indicates a discount compared to an average of 27.13 for the Specialty
Retail industry and a value on par with the S&P 500 average of 21.53. For additional comparison, its
price-to-book ratio of 25.47 indicates a significant premium versus the S&P 500 average of 2.56 and a
significant premium versus the industry average of 12.59. The current price-to-sales ratio is above both the
S&P 500 average and the industry average, indicating a premium.
2 Year Chart
Price/Earnings
BUY: $80.98
$150
$125
$100
2014
2015
1
2
3
premium
HD 23.23
Peers 27.13
• Discount. A lower P/E ratio than its peers can
signify a less expensive stock or lower growth
expectations.
• HD is trading at a discount to its peers.
Price/Projected Earnings
From
Buy
To
Buy
Price reflects the closing price as of the date listed, if available
5
1
2
3
4
5
RATINGS DEFINITIONS &
DISTRIBUTION OF THESTREET RATINGS
Price/Book
(as of 2/25/2016)
HD 25.47
Peers 12.59
• 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.
32.19% Buy - We believe that this stock has the
opportunity to appreciate and produce a total return of
more than 10% over the next 12 months.
35.29% Hold - We do not believe this stock offers
conclusive evidence to warrant the purchase or sale of
shares at this time and that its likelihood of positive total
return is roughly in balance with the risk of loss.
32.52% Sell - We believe that this stock is likely to
decline by more than 10% over the next 12 months, with
the risk involved too great to compensate for any
possible returns.
TheStreet Ratings
14 Wall Street, 15th Floor
New York, NY 10005
www.thestreet.com
Research Contact: 212-321-5381
Sales Contact: 866-321-8726
2
3
premium
Price/Sales
1
2
premium
4
5
4
5
Price to Earnings/Growth
4
5
discount
1
2
3
premium
4
5
discount
HD 1.71
Peers 1.94
• 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.
Earnings Growth
1
2
3
4
lower
5
higher
HD 15.67
Peers 16.94
• Average. Elevated earnings growth rates can lead
to capital appreciation and justify higher
price-to-earnings ratios.
• HD is expected to keep pace with its peers on the
basis of earnings growth.
Sales Growth
discount
HD 1.82
Peers 1.55
• 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.
3
HD 17.16
Peers 15.49
• 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.
discount
3
2
premium
discount
HD 18.07
Peers 19.03
• 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.
1
1
Price/CashFlow
discount
premium
MOST RECENT RATINGS CHANGES
Date
Price
Action
2/25/14
$80.98 No Change
4
1
2
3
lower
4
5
higher
HD 6.42
Peers 5.35
• Higher. A sales growth rate that exceeds the
industry implies that a company is gaining market
share.
• HD has a sales growth rate that exceeds its peers.
DISCLAIMER:
The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but
TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided
via the COMPUSTAT® Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as
other third-party data providers.
TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided
for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or
other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a
qualified securities professional, before you make any investment. None of the information contained in this report constitutes,
or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a
determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of
the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the
investment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found at
http://www.thestreet.com/static/about/terms-of-use.html.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 5