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What Do Analysts Think About The Home Depot, Inc.'s (NYSE:HD) Future?

Simply Wall St

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In May 2019, The Home Depot, Inc. (NYSE:HD) announced its earnings update. Overall, it seems that analyst expectations are fairly bearish, with profits predicted to rise by 0.4% next year relative to the higher past 5-year average growth rate of 13%. Presently, with latest-twelve-month earnings at US$11b, we should see this growing to US$11b by 2020. Below is a brief commentary on the longer term outlook the market has for Home Depot. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

See our latest analysis for Home Depot

How is Home Depot going to perform in the near future?

Over the next three years, it seems the consensus view of the 30 analysts covering HD is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.

NYSE:HD Past and Future Earnings, July 1st 2019

By 2022, HD's earnings should reach US$13b, from current levels of US$11b, resulting in an annual growth rate of 6.9%. EPS reaches $12.37 in the final year of forecast compared to the current $9.78 EPS today. Margins are currently sitting at 10%, which is expected to expand to 11% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Home Depot, I've put together three relevant aspects you should look at:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Home Depot worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Home Depot is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Home Depot? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.