HD - Embedded Expectations Analysis - 2020 11 05
The Home Depot, Inc. (HD:USA) trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 24.7x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may have concerns about their liquidity position, supply chain network, and ability to maintain high customer engagementsSpecifically, management may lack confidence in their ability to sustain a strong liquidity position, continue driving transaction growth, and maintain positive double-digit sales growth. Moreover, they may be concerned about their supply chain network, the duration and impact of the pandemic, and the impact of closing their spring promotions and major events. Furthermore, they may have concerns about continued softness in their kitchen and bath business. In addition, they may lack confidence in their ability to retain higher customer engagements, offer a more personalized experience, and have enough cleaning products in stock. Finally, management may be exaggerating the performance of their e-commerce business
The Home Depot is a home improvement retailer. The company provides its customers an assortment of building materials, home improvement products, lawn and garden products, and decor products and provides a number of services, including home improvement installation services and tool and equipment rental. The company also maintains a network of distribution and fulfillment centers, as well as a number of e-commerce websites. The company provides a number of programs for its Professional Customers to meet their particular needs, and for its Do-It-Yourself and Do-It-For-Me customers, the company provides a number of installation services. The company also provides tool and equipment rentals for its customers.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.