Get Ready to Build on Home Depot
The same group of 25 analysts anticipates sales growth (revenue) to have improved by an average estimate of 10.50%. This would bring the annual revenue total to over $74 billion -- not too shabby for a company with a market cap of $96 billion.
As was reported Monday at TheStreet.com, Home Depot, "together with its subsidiaries, operates as a home improvement retailer. The company's stores sell building materials, and home improvement and lawn and garden products to do-it-yourself, do-it-for-me (at D-I-F-M), and professional customers. The company has a P/E ratio of 22.8, above the S&P 500 P/E ratio of 17.7.
" TheStreet Ratings rates Home Depot as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, revenue growth, notable return on equity and increase in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
It's interesting to compare HD with its main competitor Lowe's (LOW) , which fell almost 5% during Monday's huge market selloff.
LOW's quarterly earnings report was revealed on Monday and it beat estimates. As one report put it, "Lowe's knocked the ball out of the park." LOW is catching up with HD when it comes to share price and the financial fundamentals. Yet, investors sold the news with an enormous spike in volume.
Here's the one-year price and revenue chart for LOW and it looks a lot like HD's.
For the time being, we might have seen the highs for both LOW and HD. Both companies are selling at rich earnings multiples both trailing and forward (one-year). Both companies dividend yield-to-price are at puny levels of around 1.8%. That's low when compared to another DJIA stock, Coca-Cola (KO) , which yields nearly 3%.
So my forecast is for partly cloudy skies and a 50% chance of a little more share-price correction for HD, perhaps on the magnitude of what happened to LOW on Monday, depending on HD's numbers. The lower Bollinger Band price range for HD may suggest the downside may be around $63.
Then again, if you believe in HD, and if the company guides confidently for the quarters ahead, it may be off to the races" towards hitting the consensus one-year price target of nearly $70.Seasoned investors may want to nibble just in case the rest of this week continues Monday's miserable market mood. Don't be fooled though, the bull market in stocks most likely has a long way to run. At the time of publication the author had no position in any of the stocks mentioned.