Home Depot‘s (NYSE: HD) stock price has increased more than 1.6x from $134/share in August 2016 to $220/share in August 2019. The increase was primarily driven by a continuous increase in Total Revenue, Net Income margin, and the buyback of shares. Revenue growth and margin increase are expected to continue in 2019. Price-to-Earnings (P/E) multiple of the company has seen a small increase compared to 2016.
You can view the Trefis interactive dashboard – Home Depot: Why did the stock grow 1.6x in 3 years? In addition, here is more Consumer Discretionary data.
Home Depot’s Revenue saw a steady increase over the years
- Home Depot’s revenues have increased by 14.4% from $94.6 billion in 2016 to $108.2 billion in 2018, adding close to $13.6 billion to its revenue base.
- Revenues are further expected to increase at a rate of 2.9% to $111.3 billion in 2019, which would mark an addition of over $16.7 billion to total revenues over the period 2016-2019.
- Higher revenue is likely to be driven by strong performance of revenue per square per foot metric.
Profitability and Multiple:
- Net Income margin remained nearly flat at around 8.4% and 8.6% in 2016 and 2017 respectively, it increased sharply to 10.3% in 2018, primarily due to lower effective tax rate which declined from around 37% in 2016 and 2017 to 23.6% in 2018. Net income margin is expected rise further to 10.9% in 2019, by better operational efficiency.
- Home Depot’s P/E multiple saw a small increase from 20.5x in 2016 to 20.9x in August 2019. Lowe’s meanwhile saw an increase in its P/E multiple in 2019 and was at 33.2x in August 2019 after posting good results in 2018 and the first 2 quarters of 2019.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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