On Tuesday, Evercore ISI maintained its positive stance on Home Depot (NYSE:HD), reiterating an Outperform rating with a steady price target of $420.00.
The firm's analysis highlighted Home Depot's first-quarter performance, which aligned with expectations, and the company's confirmation of its 2024 guidance, excluding the impact of the recent SRS acquisition. Home Depot reported a slight earnings per share (EPS) win at $3.63, marginally higher than the consensus estimates of $3.60. However, comparable store sales (comps) were slightly below market predictions, registering at -2.8% against an anticipated -2.3%.
The report also noted a decrease in transactions by 1% and a 1.3% drop in ticket size. Despite these declines, management pointed to an improving trend with traffic down just 1%, and ticket size holding steady when compared to the fourth quarter.
"Trends into the critical spring selling season will be a key focus. Our web traffic tracker and EPS Swoon or Pause preview report better April/May trends in consideration categories (Home, Auto) even if dollar sales remain down yoy," said analysts at Evercore ISI.
Home Depot's reaffirmed guidance, which does not factor in the SRS acquisition, suggests stability, although the company's stock repurchase rate has slowed. In the first quarter of 2024, Home Depot repurchased $649 million worth of shares, a significant decrease from the $2.9 billion bought back in the same period the previous year. This reduction in buybacks has been incorporated into Evercore ISI's analysis, with their EPS estimate for the year set at $15.20, slightly below the consensus of $15.32.
Additionally, Evercore ISI's Home Improvement Lead indicator forecasts an upturn in the home improvement market in the second half of the year, following a downturn throughout the first half.
InvestingPro Insights
Following Evercore ISI's reaffirmation of Home Depot's Outperform rating, a glance at the latest metrics from InvestingPro provides additional context for investors. Home Depot, a staple in the Specialty Retail industry, is trading at a Price / Book multiple of 323.69 as of the last twelve months ending Q4 2024. This high valuation ratio is complemented by a robust Market Cap of approximately $337.9 billion, reflecting the company's significant presence in the market. The P/E Ratio, a measure of the company's current share price relative to its per-share earnings, stands at 22.51, with a slight adjustment to 22.32 for the same period.
Investors may also take note of Home Depot's commitment to shareholder returns, as evidenced by a dividend yield of 2.64% and a remarkable track record of raising its dividend for 14 consecutive years, as highlighted by one of the InvestingPro Tips. Moreover, the company has maintained its dividend payments for an impressive 38 consecutive years. This consistency in dividend payments, coupled with a projected profitable year ahead, underscores the financial stability that Home Depot offers to its shareholders. For those seeking further insights, there are additional InvestingPro Tips available to guide investment decisions, including the company's moderate level of debt and its strong return over the last five years.
Interested readers can explore these insights in greater depth and discover more tips by visiting InvestingPro's dedicated page for Home Depot at https://www.investing.com/pro/HD. To enhance your investment research, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 9 additional InvestingPro Tips waiting, investors have a wealth of information at their fingertips to make informed decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.