Home Depot (HD) is one of the biggest companies in the U.S. with a market cap of around $300 billion. The Atlanta-based home-improvement retailer is often viewed as a proxy for the U.S. housing market. Meanwhile, the stock is one of the top stocks in the Dow Jones Industrial Average for 2021, but is Home Depot stock a buy in the current stock market uptrend?
Home Depot Stock Fundamental Analysis: Coronavirus Impact
Home Depot operates more than 2,200 Home Depot stores across the U.S., Canada and Mexico. Its stellar history began with two store openings in 1979. Its fundamental story of offering a “huge variety of merchandise at great prices with highly-trained staff” sparked a tremendous stock move in the 1980s and into the early 1990s.
Meanwhile, Home Depot’s fundamental track record is exemplary. In the fiscal year ended in January 2011, the company earned $2.03 per share. In FY 2021, EPS measured $12.03, up 17%. The Street expects earnings to grow 4% to $12.52 a share in FY 2022 ending in January that year.
On Feb. 23, the company reported better-than-expected Q4 earnings and sales results. Home Depot earnings grew 16% to $2.65 a share, including 9 cents in one-time costs related to the acquisition of HD Supply. Revenue rose 25% to $32.26 billion. Same-store sales surged 24.5%, with U.S. comps up 25%.
According to the IBD Stock Checkup, Home Depot stock has an 83 out of a highest-possible 99 IBD Composite Rating. The Composite Rating helps investors easily measure a stock’s fundamental, technical and fund sponsorship qualities.
On Jan. 13, Guggenheim upgraded Home Depot from neutral to buy with a 310 price target.
Guggenheim analyst Steven Forbes upgraded the stock due to the company’s acquisition of HD Supply, its recent $3 billion debt offering, and a more moderate valuation relative to the stock’s historical premium.
Is HD Stock A Buy Right Now?
During the coronavirus stock market crash, Home Depot stock traded as much as 43% off its 52-week high. But amid the current uptrend, shares of the retailer are extended above a new consolidation with a 293.05 buy point, according to IBD MarketSmith chart analysis.
Meanwhile, the stock is above its 50-day and 200-day moving average lines.
A key flaw is the stock’s strong RS line. The RS line remains far from its old highs during the current stock market uptrend. The relative strength line measures a stock’s price performance relative to the S&P 500.
Shares are extended past the 5% buy zone amid Wednesday’s 0.6% loss. For now, the stock is no longer a buy because it’s extended. The 5% buy zone goes up to 307.70.
For more top stocks and stocks approaching buy points, check out these IBD Stock Lists, like the Stocks Near Buy Zones. To see the current stock market trend, check out IBD’s signature daily analysis, The Big Picture.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the stock market.
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