How much a stock’s price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.
Another thing that can drive investing is the fear of missing out, or FOMO. This particularly applies to tech giants and popular consumer-facing stocks.
What if you’d invested in Home Depot (HD) ten years ago? It may not have been easy to hold on to HD for all that time, but if you did, how much would your investment be worth today?
Home Depot’s Business In-Depth
With that in mind, let’s take a look at Home Depot’s main business drivers.
Based on net sales, The Home Depot Inc. is the world’s largest home improvement specialty retailer with 2,291 retail stores across the globe as of the end of fiscal 2019. It offers a diverse range of branded and proprietary home improvement items, building materials, lawn and garden products, décor products and related services.
With the help of its stores, the company operates throughout the United States (including Puerto Rico and the territories of the Virgin Islands and Guam), Canada and Mexico and employs more than 300,000 associates. The company’s average store area is almost 104,000 square feet with approximately 24,000 square feet of additional outside garden area. It also functions through a network of distribution and fulfillment centers, as well as a number of e-commerce websites.
The company typically serves three primary customer groups: Do-It-Yourself (DIY), Do-It-For-Me (DIFM), and Professional Customers.
DIY Customers: These customers are usually homeowners, who prefer purchasing products and completing installations on their own. The company engages these customers in various platforms to provide product and project knowledge.
DIFM Customers: These customers are usually homeowners, who purchase products on their own and employ third-parties to complete the projects and installations. The company offers a variety of installation services in sores, online, or in their homes through in-home consultations for DIFM customers.
Professional Customers: This customer segment mostly comprises professional remodelers, general contractors, repairmen, small business owners, and tradesmen. These customers build, renovate, remodel, repair and maintain residential properties, multifamily properties, hospitality properties and commercial facilities.
While anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in Home Depot ten years ago, you’re probably feeling pretty good about your investment today.
A $1000 investment made in April 2011 would be worth $8,599.57, or a gain of 759.96%, as of April 27, 2021, according to our calculations. This return excludes dividends but includes price appreciation.
The S&P 500 rose 210.83% and the price of gold increased 13.98% over the same time frame in comparison.
Going forward, analysts are expecting more upside for HD.
The Home Depot has outpaced the industry in year to date courtesy of its fundamental strength and a robust surprise trend with third straight quarter of earnings and sales beat posted in fourth-quarter fiscal 2020. During the quarter, the company witnessed continued strong demand for home improvement projects. Also, broad-based strength across its business and geographies led to comparable sales growth. It also gained from strong growth in its Pro and DIY customer categories. Its interconnected retail strategy and underlying technology infrastructure have helped boost web traffic in fiscal 2020. However, the company has been witnessing soft margins trend on higher expenses. Negative product mix and pressures from shrink and higher transportation costs have been headwinds. It also provided a lower-than-expected view for fiscal 2021.
The stock is up 6.61% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 4 higher, for fiscal 2021. The consensus estimate has moved up as well.
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The Home Depot, Inc. (HD) : Free Stock Analysis Report
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