Dividend Stock Wednesday: The Home Depot (HD-NYSE)
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This is an analysis completed by The Dividend Guy. It is not to be used as investment advice or a recommendation to buy, hold, or sell any stocks discussed. Please ensure you complete your own analysis.
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I have been a shareholder of The Home Depot since 2004 when I purchased my initial shares at around $35. The share price has dropped since then as the company had some difficulties with revenue and EPS growth as well as the previous CEO being absolutely dreadful at working with shareholders. I have been patient with HD primarily because of the very strong dividend increases the company continues to put forward. Here is the results of my overall analysis of the company
The Company: The Home Depot (HD-NYSE)
Home Depot is the one of world’s largest home improvement retailer. The company offers a level of service unprecedented among warehouse-style retailers. Home Depot stores cater to do-it-yourselfers, as well as home improvement, construction and building maintenance professionals. The Home Depot currently operates in the USA, Canada, Chile, Puerto Rico, and Argentina. The company also operates EXPO Design Centers across the U.S. and Villager’s Hardware in New Jersey.
| Yes | |
| Yes |
THE FUNDAMENTALS
Revenue
Click to EnlargeRevenue Scoring
| Criteria | Scoring |
| Consistenly Up with No Down Years | 1.0 |
| Up Trend with Less Than 2 Down Years | 0.5 |
| Choppy with Greater Than 2 Down Years | 0.0 |
| My Revenue Score | 0.5 |
Earnings Per Share
Click to EnlargeEarnings Per Share Scoring
| Criteria | Scoring |
| Consistenly Up with No Down Years | 1.0 |
| Up Trend with Less Than 2 Down Years | 0.5 |
| Choppy with Greater Than 2 Down Years | 0.0 |
| My EPS Score | 0.5 |
TOTAL FUNDAMENTALS SCORE: 1.0
THE RATIOS
Return on Equity
Click to EnlargeReturn on Equity Scoring
| Criteria | Scoring |
| Above 15% for Last 5 Years | 1.0 |
| At Least One Year Below 15% in Last 5 Years | 0.0 |
| My ROE Score | 1.0 |
Other Ratios
| Ratio | Criteria | Value | Score (Pass=1 / Fail = 0) |
| Debt to Equity | Less Than 0.50 | 0.71 | 1.0 |
| Payout Ratio | Less Than 60% | 38% | 1.0 |
| Credit Rating | BBB+ | BBB+ | 1.0 |
| Total Ratio Score | 3.0 |
TOTAL RATIOS SCORE: 4.0
DIVIDEND DATA
Annual Dividends
Click to EnlargeDividend Scoring
| Criteria | Scoring |
| 25+ Years of Dividend Growth | 1.0 |
| 10+ Years of Dividend Growth | 1.0 |
| Less Than 10 Years of Dividend Growth | 0.0 |
| My Dividend Growth Score | 2.0 |
TOTAL DIVIDEND GROWTH SCORE: 2.0
STOCK VALUATION
| Valuation Metric | Criteria | Value | Score (Pass=1 / Fail = 0) |
| Dividend Yield | Cur Yld Greater Than 10 Yr Avg Yld | 1.0% | 1.0 |
| Div Yld Compared to SPY Div Yld | Cur Yld Greater Than SPY Yld | 3.6% | 1.0 |
| P/E Ratio | Cur P/E Less Than 10 Yr Avg P/E | 27.4 | 1.0 |
| Relative P/E | Relative P/E Less Than 1.0 | 0.39 | 1.0 |
| Price to Sales | Less Than 1.5 | 0.56 | 1.0 |
| Total Ratio Score | 5.0 |
Canadian Shareowner’s Association Stock Selection Guide Software Buy Price
| Buy Zone |
Maybe Zone |
Sell Zone |
Current Price | Rating | Scoring (Buy=1.0, Other=0.0) |
| 1.0 |
TOTAL STOCK VALUATION SCORE: 6.0
SUMMARY
Points Earned:
13 out of 14
The stock is rated HIGH with 13 points earned through my analysis of the stock. The valuation on a historical basis suggests this stock is very much underpriced. However, this analysis is primarily quantitative and some qualitative things about the company must be considered. First, Home Depot is a cyclical business and reacts to what the housing and building markets do. Given the terrible performance in these areas, it is no wonder that both revenue and earnings are way down for 2008. Before pulling the trigger on a buy, I would want to see some sort of recovery in these metrics. It is not all about price – it is value in the context of a strong business.
| Rating | Points Required |
| High | 11+ points |
| Medium | 8-10 points |
| Low | < 8 points |
Reminder: This is an analysis completed by The Dividend Guy. It is not to be used as investment advice or a recommendation to buy, hold, or sell any stocks discussed. Please ensure you complete your own analysis.
The Dividend Guy owns shares in HD
4 Comments on this post
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ramzes.ram said:
Hi, everybody! I’m Roman. I am from Russia, Khabarovsky krai. I live in not a big but a very beautiful town Komsomolsk-on-Amur. I was born and grew up there. Now I an 27. During last years the amount of Japanise cars increased greatly in our town. I myself have a car of a Japanise producer.
I work as an electrician in one automobile company. I repair South Korean buses.
But these buses are very differnt in servicing from Japanise cars such as Nissan, Toyota, Honda and so on.
During repairing this cars a lot of questions appear.
Especialy if you don’t have special equipment for testing their electronics and elecrtical devices.
I’d like to creat my own site ……April 20th, 2008 at 7:16 am -
DimusUs said:
From “Upgr”, in comparison with a standard complete set only on 6 disks in a luggage carrier. Itself has installed Magik System – the domestic signal system with remote and on the timer start. In the winter, and the car spent the night only in the street, it allowed to go without problems in any frost. Before there went on Toyota the Sprinter. Two greaterbig differences. Road Novosibirsk-250 km. it was reduced to 40 minutes and any weariness. For a year my style of driving has changed also – became more aggressive. Both the cursor and ergonomics the car stimulates it. The car satisfies also me and my 24-years son.
mitsubishi san antonio Fuel. In the beginning filled in 96 – 95-th. The charge up to 15 litres in a city cycle. After consultations since a box the automatic device – was switched on 92-93. Result – decrease in the charge up to 12 . In city. Some loss in capacity power, but is insignificant.
Repair. At once running, all somewhere on 1000 $. In a year has replaced the old accumulator.
I go one and a half year. If also that that would be desirable, newer model of the Chord, and that, I think, because of to aspiration to new.
April 20th, 2008 at 1:51 pm -
allextoyot said:
Hi!
From “Upgr”, in comparison with a standard complete set only on 6 disks in a luggage carrier. Itself has installed Magik System – the domestic signal system with remote and on the timer start. In the winter, and the car spent the night only in the street, it allowed to go without problems in any frost. Before there went on Toyota the Sprinter. Two greaterbig differences. Road Novosibirsk-250 km. it was reduced to 40 minutes and any weariness. For a year my style of driving has changed also – became more aggressive. Both the cursor and ergonomics the car stimulates it. The car satisfies also me and my 24-years son.
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More shortly, have made to me the car, it became much more pleasant, but thus there was other reality. Once having felt the racer I have burnt a cursor, and itself have not understood as? As to me have then explained pressure was big, any there the hose has flied, after repair in a month the automatic device was covered. Basically itthis should be expected, now I search for mechanics that will be further I do not know, but on to means I could buypurchase to myself . And now that ?????-was quietly to go with a guarantee of that that the car always in norm or is fast, but thus to look, what gasoline, what pressure, what temperature and where idling has got to.???
Bay-bay…
April 27th, 2008 at 2:54 am
[...] artist, face painter and …http://www.lompocrecord.com/articles/2008/03/25/business/biz11.txtDividend Stock Wednesday: The Home Depot HD-NYSEDividend Stock Wednesday: The home depot HD-NYSE Written by The Dividend Guy on March 12, 2008 Be [...]