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About the Company
The Home Depot, Inc. is an American home improvement supplies retailing company that sells tools, construction products, and services. The company is headquartered at the Atlanta Store Support Center in Cobb County of Atlanta, Georgia. It operates many big-box format stores across the United States (including all 50 states, the District of Columbia, Puerto Rico, the Virgin Islands, and Guam), all 10 provinces of Canada, and the country of Mexico. The MRO company Interline Brands is also owned by The Home Depot with 70 distribution centers across the United States.
Increase in Price Target
We increased our price target on The Home Depot from $150 to $170. The shares are currently trading on a P/E of 23x in line with its historical average. Given the improving economic climate, we are of the opinion that The Home Depot shares should be trading on a higher P/E.
The shares are also trading on an indicative gross dividend yield of 2.30%.
Rationale for the increase in price target as follows:
Conclusion
The Home Depot has a strong growth potential given a solid macro tailwind and we believe the company can achieve meaningful gross margin upside. We believe The Home Depot should be a core holding in a well-diversified portfolio.
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