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Valued at a market cap of $405.6 billion, The Home Depot, Inc. (HD) is a home improvement retailer based in Atlanta, Georgia. The company sells a variety of building materials, home improvement products, lawn and garden products, and décor items, as well as facilities maintenance, repair, and operations products.
Companies worth $200 billion or more are typically classified as “mega-cap stocks,” and HD fits the label perfectly, with its market cap exceeding this threshold, underscoring its size, influence, and dominance within the home improvement retail industry. The company’s key strengths include a strong brand reputation, a loyal customer base, an efficient supply chain, and a robust omnichannel strategy that integrates e-commerce with its vast network of physical stores.
This home improvement retailer is currently trading 7.3% below its 52-week high of $439.37, achieved on Nov. 26, 2024. HD has surged 10.7% over the past three months, slightly outpacing the S&P 500 Index’s ($SPX) 10.4% uptick during the same time frame.
However, in the longer term, HD has gained 9.3% over the past 52 weeks, underperforming SPX’s 16.3% rise over the same time period. Moreover, on a YTD basis, shares of HD are up 4.8%, compared to SPX’s 10.6% return.
To confirm its recent bullish trend, HD has been trading above its 200-day moving average since early August, and has remained above its 50-day moving average since early May, with slight fluctuations.
Shares of HD closed up 3.2% on Aug. 19, after its Q2 earnings release. The company’s overall revenue climbed 4.9% year-over-year to $45.3 billion, supported by strong customer engagement in smaller home improvement projects. However, higher costs pressured profitability, with its adjusted operating margin slipping by 50 basis points. As a result, its adjusted EPS marginally increased to $4.68 compared to the prior-year quarter and missed the consensus estimates.
HD has outperformed its rival, Lowe's Companies, Inc. (LOW), which gained 3.5% over the past 52 weeks and 4.4% on a YTD basis.
Looking at HD’s recent outperformance, analysts remain moderately optimistic about its prospects. The stock has a consensus rating of "Moderate Buy” from the 35 analysts covering it, and the mean price target of $436.67 suggests a 7.2% premium to its current price levels.
