Home Depot (NYSE: HD) is scheduled to report its fiscal fourth.-quarter results on Tuesday, February 22. We expect the company’s stock to likely trade higher due to its revenues and earnings beating the market expectations. The company has been witnessing a spending boom since the pandemic’s onset. Several macroeconomic factors continue to work in Home Depot’s favor, including the high prevalence of remote work, rising home prices, and limited inventory of homes for sale. That said, the company is seeing no signs of slowing down even after two years into the pandemic. In fact, the retailer recently announced that it would be hiring an additional 100,000 employees, almost 20% of its existing workforce, ahead of its busy spring season.
Our forecast indicates that Home Depot’s valuation is $410 per share, which is 18% higher than the current market price. Look at our interactive dashboard analysis on Home Depot’s Earnings Preview: What To Expect in Q4? for more details.
(1) Revenues expected to be marginally above the consensus estimates
Trefis estimates Home Depot’s Q4 2021 revenues to be around $36.1Bil, slightly above the consensus estimate of $34.9 Bil. In Q3, Home Depot’s revenues jumped 10% year-over-year (y-o-y) to $36.8 billion, also 33% higher than the same quarter in 2019. Its total comparable-store sales increased 6.16% in Q3 2021 smashing the consensus expectation of a gain of 2.2%. To add to this, comparable sales in the U.S. were up 5.5% vs. +0.9% consensus. Home Depot customers upped their spending habits when they visited stores with the average ticket up by 12.9% to $82.40 during the quarter. However, the retailer’s total transactions were down by 5.5% y-o-y to 428.2 Mil. It should be noted that unlike many companies in the retail sector, Home Depot did not dramatically highlight supply chain and labor headwinds.
We now forecast Home Depot Revenues to be $150.5 billion for the full year 2021, up 14% y-o-y. Looking at the bottom line, we now forecast EPS to come in at $15.57. The company did not provide any outlook due to uncertainty around the Covid pandemic.
2) EPS to likely beat consensus estimates slightly
Home Depot’s Q4 2021 earnings per share (EPS) is expected to be $3.28 per Trefis analysis, marginally higher than the consensus estimate of $3.17. In Q3, the company’s net income was up 20.3% y-o-y to $4.13 billion with EPS coming in at $3.92.
(3) Stock price estimate higher than the current market price
Going by our Home Depot Valuation, with an EPS estimate of around $15.57 and P/E multiple of 26.4x in fiscal 2021, this translates into a price of 410, which is 18% higher than the current market price.
It is helpful to see how its peers stack up. HD Peers shows how Home Depot compares against peers on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons.
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|S&P 500 Return||-4%||-9%||94%|
|Trefis MS Portfolio Return||-2%||-11%||251%|
 Month-to-date and year-to-date as of 2/21/2022
 Cumulative total returns since the end of 2016