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The Home Depot (HD) stock forecast: Is there more upside?

By Manaswita Ghosh Dutta

Edited by Vanessa Kintu

12:47, 11 March 2022

Ft. Wayne - Circa June 2018: Home Depot Location flying the American flag. Home Depot is the Largest Home Improvement Retailer in the US II
The Home Depot (HD) stock forecast: Is there more upside? – Photo: Shutterstock

American home improvement retailer, The Home Depot (HD), noted a surge of nearly 20% in its stock price over the period of a year as of 10 March. The company’s diverse offering of home improvement products, the pandemic-led increase in online shopping, and the firm’s extensive presence across the US led to higher sales during the period, which translated into the impressive growth in its stock price.

However, to acquire an extensive view and solid insight into The Home Depot’s stock performance, let us consider its movement over a period of five years and look at its historical stock price. This would allow us to look at the stock’s performance before the pandemic hit across three globe and the share price movement thereafter.  The understanding would help us assert The Home Depot stock projection for 2022 and beyond.

Stock analysis: 5-year performance

HD 5-year stock price chart

As of 10 March, over the period of five years HD stock price surged 116%, in comparison to an 80.3% surge in the S&P 500 index during the same period. In particular, the stock price marked a strong uptick from March 2020, around the time when the pandemic tightened its grip around the world.

The Home Depot / S&P 500 index 5-year comparison price chart

A major reason behind the stock’s strong upward momentum was the increase in overall sales, owing to high-priced items such as home appliances and vinyl plank flooring, along with installation services.

According to The Home Depot stock technical analysis, as of 10 March the relative strength index (RSI) was pointing to ‘neutral’ at 32.86. Meanwhile, the HD stock closed at $317.20 on 10 March, which was below its 200-day moving average (MA) at 349.28, which indicated a bearish signal for The Home Depot stock’s price movement ahead, according to data by TradingView.

The home improvement retailer’s market capitalisation stood at $328.61bn, making the firm the 25th most valuable firm worldwide, data by CompaniesMarketCap indicated.

Fundamental analysis: Latest earnings

To truly judge the health of the company, let us take a look at the firm’s fiscal fourth quarter ended 30 January 2022, and fiscal 2021 financial results.

The Home Depot’s net earnings rose to $3.4bn in the fiscal fourth quarter from $2.9bn a year earlier. Diluted earnings per share increased to $3.21 from $2.65. Net sales in the reported three-month period also surged to $35.7bn from $32.2bn from the year-ago period.

In the fiscal year 2021, the company’s net earnings after-tax rose to $16.4bn from $12.8bn a year earlier. Diluted earnings per share increased to $15.53 from $11.94. Net sales in the reported fiscal year also surged to $151.157bn from $132.110bn from a year earlier. Craig Menear, The Home Depot’s chairman and CEO, said:

“Our ability to grow the business by over $40bn in the last two years is a testament to investments we have made in the business, our ability to execute with agility, and our associates' relentless focus on our customers. I would like to thank all of our associates, as well as our supplier partners, for their hard work and dedication to serving our customers, communities and each other.”

The stellar earnings in the final quarter of the fiscal year 2021 and the entirety of the fiscal year ended 30 January 2022, reflect the company’s strong sales. In fact, Menear said the company achieved a milestone of more than $150bn in sales, marking another record year for the company.

The retailer also declared a quarterly dividend of $1.90 per share, which equates to an annual dividend of $7.60 per share. The dividend is payable on 24 March, to shareholders as of the record date 10 March.

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Looking ahead, the company’s fiscal year 2022 guidance anticipates sales growth and comparable sales growth to be slightly positive, while the operating margin is expected to be nearly in accordance with fiscal 2021. The firm’s net interest expense is expected to be approximately $1.5bn while the diluted earnings per share growth is expected in the low single digits.

What factors may drive The Home Depot stock ahead?

The Home Depot underwent a series of changes recently, both in terms of its leadership roles and operations. Let us take a look at some of The Home Depot stock news. 

The company appointed Edward Decker as its new CEO and president on 27 January. Decker assumed his responsibilities on 1 March. The retailer said that former chairman and CEO Craig Menear will continue to serve as chair of the board.

The Home Depot also appointed Paula Santilli, the CEO of PepsiCo Latin America (PEP), and Caryn Seidman-Becker, chair and CEO of CLEAR (YOU), to its board of directors, effective 1 March, The Home Depot said in news release issued on 24 February.

The company also teamed up with Walmart GoLocal to raise its same-day and next-day delivery operations for home improvement customers in the US. The Home Depot began offering delivery with Walmart GoLocal across select markets, and expanded across multiple markets across the country by end-2021.

HD share price forecast: What are analysts saying?

Analyst ratings compiled by MarketBeat shared different price targets for The Home Depot stock. The consensus rating was ‘buy’ based on 24 analyst views as of 10 March.

Out of the 24 analysts covering the stock, 19 rated it a ‘buy’ while five rated it a ‘hold’. These analysts were from major financial organisations such as The Goldman Sachs Group, Jefferies Financial Group, UBS Group, Morgan Stanley, Wedbush, JPMorgan Chase & Co., Citigroup, Wells Fargo & Company, Evercore ISI, Nomura, and the Royal Bank of Canada.

The analysts’ consensus 12-month HD stock forecast was $396.29. It had an upside potential of 24.93% based on the closing price of $317.20 on 10 March. The stock projection varied from the low price target of $320 to a high of $470.

Out of the most recent ratings, Morgan Stanley analyst Simeon Gutman rated the stock as ‘overweight’, lowering the stock price target from $420 to $380 on 23 February. In addition, Loop Capital’s Laura Champine also lowered the stock price target from $380 to $320.

According to the algorithm-based The Home Depot share price forecast from Wallet Investor as of 10 March, the HD stock could hit $380.929 by the end of December 2022. The service suggested the stock could be valued at $441.706 by the end of December 2023, $503.221 by the end of 2024 and $564.120 by the end of 2025.

Wallet Investor did not provide price predictions for 2030. The market researcher expects the stock to reach $625.018 in December 2026 and $628.039 in March 2027.

When looking for The Home Depot stock predictions, it’s important to bear in mind that analysts’ forecasts can be wrong. Projections are based on making fundamental and technical studies of the HD stock performance. Past performance is no guarantee of future results.

It is important to do your own research, and remember that your decision to trade depends on your attitude to risk, your expertise in the market, the spread of your investment portfolio and how comfortable you feel about losing money. Remember, you should never invest money you cannot afford to lose.

FAQs

Is The Home Depot stock a good buy?

The Home Depot stock may be a good buy, considering its impressive sales over the fiscal year 2021. Although, whether or not the stock is a good fit for you will depend on a number of factors including your attitude to risk and expertise in the market. Remember to always do your own research before investing.

How high can The Home Depot stock go?

The algorithm-based Wallet Investor projects the The Home Depot future stock price to hit $628.039 in March 2027. But analysts’ forecasts can be wrong and have been inaccurate in the future. Markets are volatile. You should conduct your own analysis, taking in such things as the environment in which it trades and your risk tolerance.

Why has The Home Depot stock price been going up?

The stock’s price has been largely influenced by the company’s strong sales over the fiscal year 2021. The firm’s net sales surged to $151.157bn in the reported period from $132.110bn a year earlier.

Will The Home Depot stock go up?

At the time of writing on 10 March, analysts predicted The Home Depot stock would move up ahead, owing to the strong demand for its diverse range of products and services. 

Note that analyst forecasts can be wrong. Forecasts shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before investing. And never invest or trade money you cannot afford to lose.

Markets in this article

HD
Home Depot
363.58 USD
-1.78 -0.490%
PEP
Pepsi
169.48 USD
-0.95 -0.560%

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You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
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