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The Home Depot, Inc. (HD), headquartered in Atlanta, Georgia, is a leader in the home improvement industry, providing a broad range of products and services to meet the needs of homeowners, DIY enthusiasts, and professional contractors alike. With a market cap of $407.4 billion, Home Depot is a key player in the consumer discretionary sector, offering everything from building materials and tools to décor and appliances, supporting projects of all sizes across North America.
Home Depot stock has outperformed the broader market over the past year. The stock has gained 33.6% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 32.3%. However, in 2024, HD stock is up 17.1%, lagging SPX’s 24.7% rise on a YTD basis.
Narrowing the focus, HD has outperformed the Consumer Discretionary Select Sector SPDR Fund (XLY). The exchange-traded fund has gained 25.5% over the past year.
Home Depot reported strong Q3 results on Nov. 12, exceeding market expectations. While revenue rose 6.6% year over year to $40.2 billion, beating analyst estimates of $39.2 billion, adjusted EPS of $3.78 also topped projections by 3.4%, reflecting strong operational performance.
Additionally, the company updated its fiscal 2024 guidance, forecasting a 4% increase in total sales, including a boost from a 53rd week. Despite these positive results, shares declined 1.3% on the earnings release day but rebounded with a 1.8% gain the following day.
For the current fiscal year, ending in Jan. 2025, analysts expect Home Depot’s EPS to grow 1.1% to $15.27 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 35 analysts covering HD stock, the consensus rating is a “Strong Buy.” That’s based on 26 “Strong Buy” ratings, one “Moderate Buy,” and eight “Holds.”
This configuration is more bullish than three months ago, with 22 suggesting a “Strong Buy.”
Yesterday, Stifel raised Home Depot's price target to $405 from $400, maintaining a “Hold” rating after stronger-than-expected Q3 EPS driven by improved sales and gross margins.
The mean price target of $420.94 represents a 3.8% premium to HD’s current price levels. The Street-high price target of $466 suggests an upside potential of 14.9%.
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