Home Depot Profitability Analysis

HD Stock  USD 371.91  1.32  0.35%   
Based on Home Depot's profitability indicators, Home Depot may not be well positioned to generate adequate gross income at the moment. It has a very high risk of underperforming in April. Profitability indicators assess Home Depot's ability to earn profits and add value for shareholders.
 
Net Income  
First Reported
1989-07-31
Previous Quarter
3.8 B
Current Value
2.8 B
Quarterly Volatility
1.2 B
 
Oil Shock
 
Dot-com Bubble
 
Housing Crash
 
Credit Downgrade
 
Yuan Drop
 
Covid
At present, Home Depot's Days Of Sales Outstanding is projected to increase slightly based on the last few years of reporting. At present, Home Depot's Income Before Tax is projected to increase significantly based on the last few years of reporting. The current year's Net Income is expected to grow to about 15.9 B, whereas Total Other Income Expense Net is projected to grow to (1.7 B).
Current ValueLast YearChange From Last Year 10 Year Trend
Gross Profit Margin0.340.3163
Notably Up
Pretty Stable
Net Profit Margin0.09740.0992
Fairly Down
Slightly volatile
Operating Profit Margin0.140.1421
Fairly Down
Slightly volatile
Pretax Profit Margin0.130.1305
Slightly Down
Slightly volatile
Return On Assets0.180.1979
Significantly Down
Slightly volatile
For Home Depot profitability analysis, we use financial ratios and fundamental drivers that measure the ability of Home Depot to generate income relative to revenue, assets, operating costs, and current equity. These fundamental indicators attest to how well Home Depot utilizes its assets to generate profit and value for its shareholders. The profitability module also shows relationships between Home Depot's most relevant fundamental drivers. It provides multiple suggestions of what could affect the performance of Home Depot over time as well as its relative position and ranking within its peers.
  
Check out Risk vs Return Analysis.
For information on how to trade Home Stock refer to our How to Trade Home Stock guide.
Is Home Depot's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Home Depot. If investors know Home will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Home Depot listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth
(0.15)
Dividend Share
8.52
Earnings Share
15.12
Revenue Per Share
152.822
Quarterly Revenue Growth
(0.03)
The market value of Home Depot is measured differently than its book value, which is the value of Home that is recorded on the company's balance sheet. Investors also form their own opinion of Home Depot's value that differs from its market value or its book value, called intrinsic value, which is Home Depot's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Home Depot's market value can be influenced by many factors that don't directly affect Home Depot's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Home Depot's value and its price as these two are different measures arrived at by different means. Investors typically determine if Home Depot is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Home Depot's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.

Home Depot Current Asset vs. Number Of Employees Fundamental Analysis

Comparative valuation techniques use various fundamental indicators to help in determining Home Depot's current stock value. Our valuation model uses many indicators to compare Home Depot value to that of its competitors to determine the firm's financial worth.
Home Depot is one of the top stocks in number of employees category among related companies. It is rated # 2 in current asset category among related companies fabricating about  35,595  of Current Asset per Number Of Employees. The current year's Non Current Assets Total is expected to grow to about 49.1 B. The current year's Other Current Assets is expected to grow to about 1.8 B. Comparative valuation analysis is a catch-all model that can be used if you cannot value Home Depot by discounting back its dividends or cash flows. This model doesn't attempt to find an intrinsic value for Home Depot's Stock . Still, instead, it compares the stock's price multiples to a benchmark or nearest competition to determine if the stock is relatively undervalued or overvalued. The reason why the comparable model can be used in almost all circumstances is due to the vast number of multiples that can be utilized, such as the price-to-earnings (P/E), price-to-book (P/B), price-to-sales (P/S), price-to-cash flow (P/CF), and many others. The P/E ratio is the most commonly used of these ratios because it focuses on the Home Depot's earnings, one of the primary drivers of an investment's value.

Home Number Of Employees vs. Competition

Home Depot is one of the top stocks in number of employees category among related companies. The total workforce of Consumer Discretionary industry is currently estimated at about 504,193. Home Depot totals roughly 463,100 in number of employees claiming about 92% of stocks in Consumer Discretionary industry.

Home Current Asset vs. Number Of Employees

Number of Employees shows the total number of permanent full time and part time employees working for a given company and processed through its payroll.

Home Depot

Number of Employees

 = 

Full Time

+

Part Time

 = 
463.1 K
Employee typically refers to an individual working under a contract of employment, whether oral or written, express or implied, and has recognized his or her rights and duties. Most officers of corporations are included as employees and contractors are generally excluded.
Current Asset is all of the company's assets that can be used to pay off current liabilities within the current fiscal period or over the next 12 months. Current Asset includes cash or cash equivalents, accounts receivable, short-term investments, and the portion of prepaid liabilities which will be paid within the next 12 months. Because these assets are easily turned into cash, they are sometimes referred to as liquid assets.

Home Depot

Current Asset

 = 

Cash

+

Deposits

+

Liquid Assets

 = 
16.48 B
Current Asset is important to company's creditors and private equity firms as they will often be interested in how much that company has in current assets since these assets can be easily liquidated in case the company goes bankrupt. However, it is usually not enough to know if a company is in good shape just based on current asset alone; the amount of current liabilities should always be considered.

Home Current Asset Comparison

Home Depot is currently under evaluation in current asset category among related companies.

Home Depot Profitability Projections

The most important aspect of a successful company is its ability to generate a profit. For investors in Home Depot, profitability is also one of the essential criteria for including it into their portfolios because, without profit, Home Depot will eventually generate negative long term returns. The profitability progress is the general direction of Home Depot's change in net profit over the period of time. It can combine multiple indicators of Home Depot, where stable trends show no significant progress. An accelerating trend is seen as positive, while a decreasing one is unfavorable. A rising trend means that profits are rising, and operational efficiency may be rising as well. A decreasing trend is a sign of poor performance and may indicate upcoming losses.
Last ReportedProjected for 2024
Accumulated Other Comprehensive Income-477 M-453.1 M
Operating Income21.7 B22.8 B
Income Before Tax19.9 B20.9 B
Total Other Income Expense Net-1.8 B-1.7 B
Net Income15.1 B15.9 B
Income Tax Expense4.8 BB
Net Income Applicable To Common Shares19.7 B20.7 B
Net Income From Continuing Ops15.1 B9.8 B
Non Operating Income Net Other63.2 M67.1 M
Interest Income178 M120.3 M
Net Interest Income-1.8 B-1.9 B
Change To Netincome579.6 M299.9 M
Net Income Per E B T 0.76  0.76 

Home Profitability Driver Comparison

Profitability drivers are factors that can directly affect your investment outlook on Home Depot. Investors often realize that things won't turn out the way they predict. There are maybe way too many unforeseen events and contingencies during the holding period of Home Depot position where the market behavior may be hard to predict, tax policy changes, gold or oil price hikes, calamities change, and many others. The question is, are you prepared for these unexpected events? Although some of these situations are obviously beyond your control, you can still follow the important profit indicators to know where you should focus on when things like this occur. Below are some of the Home Depot's important profitability drivers and their relationship over time.

Home Depot Profitability Trends

Home Depot profitability trend refers to the progression of profit or loss within a business. An upward trend means that Home Depot's profit has generally increased over time, and a downward profitability trend means profits are declining. Recognizing problems early in profitability trends allows investors to address revenue and cost issues in advance. Investors and analysts usually monitor three types of profitability trends: gross, operating, and net. Gross profit is the difference between revenue and costs of goods sold. Operating profit is Home Depot's gross profit minus its overhead. After you account for other unusual revenue, expenses, and costs, you get net profit. Gross profit trends are often a good indicator of future profitability. If you have high gross profit margins, you have a better chance to cover overhead and make money.

Home Depot Profitability Drivers Correlations

One of the toughest challenges investors face today is learning how to quickly synthesize and read into endless financial statements and information provided by the company, SEC reporting, and various external parties. Understanding the correlation between Home Depot different financial indicators related to revenue and profit generation helps investors identify and prioritize their investing strategies towards Home Depot in a much-optimized way. Analyzing correlations between profit drivers that are directly associated with dollar figures is the most effective way to break down Home Depot's future profitability.

Use Home Depot in pair-trading

One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Home Depot position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Home Depot will appreciate offsetting losses from the drop in the long position's value.

Home Depot Pair Trading

Home Depot Pair Trading Analysis

The ability to find closely correlated positions to Home Depot could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Home Depot when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Home Depot - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Home Depot to buy it.
The correlation of Home Depot is a statistical measure of how it moves in relation to other equities. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Home Depot moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Home Depot moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Home Depot can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.
Pair CorrelationCorrelation Matching

Use Investing Themes to Complement your Home Depot position

In addition to having Home Depot in your portfolios, you can quickly add positions using our predefined set of ideas and optimize them against your very unique investing style. A single investing idea is a collection of funds, stocks, ETFs, or cryptocurrencies that are programmatically selected from a pull of investment themes. After you determine your investment opportunity, you can then find an optimal portfolio that will maximize potential returns on the chosen idea or minimize its exposure to market volatility.

Did You Try This Idea?

Run Banking Thematic Idea Now

Banking
Banking Theme
Fama and French investing themes focus on testing asset pricing under different economic assumptions. The Banking theme has 61 constituents at this time.
You can either use a buy-and-hold strategy to lock in the entire theme or actively trade it to take advantage of the short-term price volatility of individual constituents. Macroaxis can help you discover thousands of investment opportunities in different asset classes. In addition, you can partner with us for reliable portfolio optimization as you plan to utilize Banking Theme or any other thematic opportunities.
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When determining whether Home Depot is a strong investment it is important to analyze Home Depot's competitive position within its industry, examining market share, product or service uniqueness, and competitive advantages. Beyond financials and market position, potential investors should also consider broader economic conditions, industry trends, and any regulatory or geopolitical factors that may impact Home Depot's future performance. For an informed investment choice regarding Home Stock, refer to the following important reports:
Check out Risk vs Return Analysis.
For information on how to trade Home Stock refer to our How to Trade Home Stock guide.
Note that the Home Depot information on this page should be used as a complementary analysis to other Home Depot's statistical models used to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

Complementary Tools for Home Stock analysis

When running Home Depot's price analysis, check to measure Home Depot's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy Home Depot is operating at the current time. Most of Home Depot's value examination focuses on studying past and present price action to predict the probability of Home Depot's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Home Depot's price. Additionally, you may evaluate how the addition of Home Depot to your portfolios can decrease your overall portfolio volatility.
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To fully project Home Depot's future profitability, investors should examine all historical financial statements. These statements provide investors with a comprehensive snapshot of the financial position of Home Depot at a specified time, usually calculated after every quarter, six months, or one year. Three primary documents fall into the category of financial statements. These documents include Home Depot's income statement, its balance sheet, and the statement of cash flows.
Potential Home Depot investors and stakeholders can use historical trends found within financial statements to determine how well the company is positioned for the future. Although Home Depot investors may work on each financial statement separately, they are all related. The changes in Home Depot's assets and liabilities, for example, are also reflected in the revenues and expenses that we see on Home Depot's income statement, which results in the company's gains or losses. Cash flows can provide more information regarding cash listed on a balance sheet but not equivalent to net income shown on the income statement. Please read more on our technical analysis and fundamental analysis pages.