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General information
The Home Depot, Inc. is a home improvement retailer that sells building materials and home improvement products. The Company sells a wide assortment of building materials, home improvement and lawn and garden products, and provide a number of services. Home Depot operates throughout the United States, Canada, China, and Mexico.
  • Good financial results growth rate 20.8% (average between last period year over year growth for revenue and EBITDA), there is acceleration compared to average historical growth rates (6.9%)
  • Dividend yield for the last twelve months 2.2%
  • Free cash flow yield 5.6% (LTM)
  • Share price is 77.3% higher than minimum and 7.6% lower than maximum for the last 3 years
  • The company is overvalued by EV / LTM EBITDA multiple compared to target level (16.3x vs 15.7x)
  • Fundamental value created in LTM (estimate) 19.2%
Key Financials
Ticker: HD
Share price, USD: 269.72
Common stocks: 1 090 831 020
Dividend Yield:  2.2%
FCF Yield LTM: 5.6%
EV / LTM EBITDA: 16.3x
Last revenue growth (y/y):  23.4%
Last growth of EBITDA (y/y):  18.1%
Historical revenue growth:  6.9%
Historical growth of EBITDA:  6.8%
Target EV / EBITDA (hist 75% percentile): 15.7x
Express share price potential: 3.6%
Fundamental value created in LTM: 19.2%
EV / LTM EBITDA mutiple calculation
Market Cap ($m): 294 219
Net Debt ($m): 26 433
EV (Enterprise Value): 320 652
EBITDA LTM ($m): 19 701
EV / LTM EBITDA: 16.3x

Revenue and EBITDA

Quarterly values ($m)

Change (y/y)

Cash Flow

Free Cash Flow ($m)

Net Debt / Cash and Equivalents ($m)

Share price and dividends

Share price

Payment USD per share

Multiple and potential

EV / LTM EBITDA and 75% percentile

Potential dynamics

Value Creation

Fundamental Value Creation is calculated as ratio of value created in the last period to current market cap of the company.

The fundamental value can be created in two ways:
• cash generation in form of dividend payments or debt reduction or share buybacks
• growth of the company enterprise value through improving financial results

The growth of enterprise value in the last period is estimated as product of:
• annualized increase of EBITDA in the last reporting period year over year
• relevant EV/EBITDA multiple (average between actual EV/EBITDA for the company and average general level of 10.0x is applied)

Parameter
#
Formula
Value
    
    
            EBITDA (pre LTM Q)
(1)
5 657
            EBITDA (last Q)
(2)
6 682
            EBITDA LTM
(3)
19 701
    
    
        EBITDA LTM / last Q
(4)
(3) / (2)
2.948
    Gain of EBITDA (mln $)
(5)
( (2)-(1) ) * (4)
3 022
    
    
            EV
(6)
322 288
        Mult
(7)
(6) / (3)
16.4x
        Mult common
(8)
const
10.0x
    Mult avg
(9)
avgerage
13.2x
    
    
    Equity+
(10)
(5) * (9)
39 829
    FCF LTM
(11)
16 600
    
    
Value+
(12)
(10) + (11)
56 429
Cap
(13)
294 219
    
    
Fundamental value creation
(14)
(12) / (13)
19.2%

Potential

EBITDA LTM       19 701
 
EBITDA E       20 845
Mult aim       15.7x
 
EV E       327 273
NetDebt corr       22 566
 
Cap E       304 707
Cap       294 219
Growth potential            3.6%