Home Depot Story

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HD -- USA Stock  

USD 279.96  1.67  0.59%

11% of stocks are less risky than Home Depot on the bases of their historical return distribution, and some 95% of all equities are expected to be superior in generating returns on investments over the next 90 days. As many conservative investors are still indifferent towards latest market risk, it is prudent, from our point of view, to digest Home Depot's current volatility. We will go over a few points Home Depot shareholders should remember regarding its volatility. Home Depot's very low volatility may have no significant impact on the stock's value as we estimate Home Depot as currently overvalued. The real value, based on our calculations, is getting close to 268.87 per share.
Published over a month ago
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Is Home Depot (NYSE:HD) low volatility a good sign for shareholders?
Home Depot reports roughly 8.7 B in cash with 14.75 B of positive cash flow from operations. This results in cash-per-share (CPS) ratio of 8.09.
Volatility is a rate at which the price of Home Depot or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of Home Depot may increase or decrease. In other words, similar to Home Depot's beta indicator, it measures the risk of Home Depot and helps estimate the fluctuations that may happen in a short period of time. So if prices of Home Depot fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility. Please read more on our technical analysis page.

How important is Home Depot's Liquidity

Home Depot financial leverage refers to using borrowed capital as a funding source to finance Home Depot ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Home Depot financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Home Depot's total debt and its cash.

What do experts say?

Stock analysis is a method for investors and traders to make buying and selling decisions. By studying and evaluating past and current data, investors and traders attempt to gain an edge in the markets by making informed decisions. It is good to see analyst projects for Home Depot, but it might be worth checking our own buy vs. sell analysis

Home Depot Volatility Drivers

Home Depot unsystematic risk is unique to Home Depot and usually not directly affected by the market or economic environment. An example of unsystematic risk is the possibility of poor earnings or a layoff due to coronavirus. One may mitigate nonsystematic risk by buying different securities in the same industry or by buying in different sectors. For example, if you have a position in Home Depot you can also buy Lowes Companies. You can also mitigate this risk by investing in the home improvement retail sector as well as in companies having nothing to do with it. This type of risk is also called diversifiable risk and can be understood from analyzing Home Depot important indicators over time. Here we run a correlation analysis between relevant fundamental ratios over at least ten year period to find a relationship in the way they react to changes in Home Depot income statement and balance sheet. Here are more details about Home Depot volatility.
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