By Rob Otman
Home Depot (NYSE: HD) is a large cap company that operates within the specialty retail industry. Its market cap is $189 billion today and the total one-year return is 19.51% for shareholders.
Home Depot stock is beating the market, and it reports earnings next week. Does that make it a good buy today? To answer this question we’ve turned to the Investment U Stock Grader. Our research team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
[iu-adbox]
Earnings-per-Share (EPS) Growth: Home Depot reported a recent EPS growth rate of 23.93%. That’s below the specialty retail industry average of 191.34%. That’s not a good sign. We like to see companies that have higher earnings growth.
Price-to-Earnings (P/E): The average price-to-earnings ratio of the specialty retail industry is 28.85. And Home Depot’s ratio comes in at 24.25. It’s trading at a better value than many of its competitors.
Debt-to-Equity: The debt-to-equity ratio for Home Depot stock is 544.68. That’s above the specialty retail industry average of 89.34. That’s not a good sign. Home Depot’s debt levels should be lower.
Free Cash Flow per Share Growth: Home Depot’s FCF has been lower than its competitors over the last year. That’s not good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.
Profit Margins: The profit margin of Home Depot comes in at 7.85% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Home Depot’s profit margin is above the specialty retail average of 6.62%. So that’s a positive indicator for investors.
Return on Equity: Return on equity gives us a look at the amount of net income returned to shareholders. The ROE for Home Depot is 149.44%, and that’s above its industry average ROE of 24.19%.
Home Depot stock passes three of our six key metrics today. That’s why our Investment U Stock Grader rates it as a hold.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth. For more details, click here.
Thoughts on this article? Leave a comment below. …read more
Source:: Investment You
The post Should You Buy Home Depot Stock Today? appeared first on Junior Mining Analyst.