Intrinsic value of Home Depot, Inc. (The) - HD

Previous Close

$205.66

  Intrinsic Value

$96.24

stock screener

  Rating & Target

str. sell

-53%

Previous close

$205.66

 
Intrinsic value

$96.24

 
Up/down potential

-53%

 
Rating

str. sell

We calculate the intrinsic value of HD stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 232.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  5.10
  5.09
  5.08
  5.07
  5.07
  5.06
  5.05
  5.05
  5.04
  5.04
  5.03
  5.03
  5.03
  5.03
  5.02
  5.02
  5.02
  5.02
  5.02
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.00
Revenue, $m
  106,050
  111,448
  117,111
  123,052
  129,285
  135,826
  142,689
  149,892
  157,451
  165,384
  173,711
  182,451
  191,625
  201,255
  211,364
  221,976
  233,116
  244,811
  257,088
  269,977
  283,509
  297,715
  312,630
  328,289
  344,730
  361,991
  380,114
  399,142
  419,120
  440,096
Variable operating expenses, $m
  84,935
  89,246
  93,769
  98,514
  103,493
  108,718
  114,200
  119,953
  125,991
  132,327
  138,751
  145,732
  153,060
  160,752
  168,826
  177,302
  186,200
  195,541
  205,348
  215,643
  226,451
  237,799
  249,712
  262,220
  275,351
  289,139
  303,614
  318,813
  334,770
  351,524
Fixed operating expenses, $m
  5,614
  5,737
  5,864
  5,993
  6,124
  6,259
  6,397
  6,538
  6,681
  6,828
  6,979
  7,132
  7,289
  7,449
  7,613
  7,781
  7,952
  8,127
  8,306
  8,488
  8,675
  8,866
  9,061
  9,260
  9,464
  9,672
  9,885
  10,103
  10,325
  10,552
Total operating expenses, $m
  90,549
  94,983
  99,633
  104,507
  109,617
  114,977
  120,597
  126,491
  132,672
  139,155
  145,730
  152,864
  160,349
  168,201
  176,439
  185,083
  194,152
  203,668
  213,654
  224,131
  235,126
  246,665
  258,773
  271,480
  284,815
  298,811
  313,499
  328,916
  345,095
  362,076
Operating income, $m
  15,502
  16,465
  17,478
  18,545
  19,667
  20,849
  22,092
  23,401
  24,779
  26,228
  27,982
  29,587
  31,276
  33,054
  34,925
  36,893
  38,964
  41,142
  43,434
  45,846
  48,382
  51,050
  53,857
  56,809
  59,914
  63,180
  66,615
  70,227
  74,025
  78,019
EBITDA, $m
  17,805
  18,873
  19,998
  21,181
  22,425
  23,735
  25,113
  26,563
  28,088
  29,693
  31,382
  33,158
  35,027
  36,993
  39,062
  41,238
  43,526
  45,934
  48,466
  51,130
  53,931
  56,878
  59,976
  63,235
  66,662
  70,265
  74,054
  78,039
  82,228
  86,633
Interest expense (income), $m
  924
  1,460
  1,408
  1,524
  1,645
  1,773
  1,906
  2,047
  2,194
  2,348
  2,510
  2,681
  2,859
  3,047
  3,243
  3,450
  3,667
  3,894
  4,133
  4,384
  4,647
  4,924
  5,214
  5,519
  5,839
  6,174
  6,527
  6,897
  7,286
  7,694
  8,123
Earnings before tax, $m
  14,042
  15,057
  15,954
  16,899
  17,895
  18,943
  20,046
  21,208
  22,431
  23,718
  25,301
  26,728
  28,230
  29,811
  31,475
  33,226
  35,069
  37,009
  39,050
  41,198
  43,458
  45,836
  48,338
  50,971
  53,740
  56,653
  59,717
  62,941
  66,331
  69,897
Tax expense, $m
  3,791
  4,065
  4,308
  4,563
  4,832
  5,114
  5,412
  5,726
  6,056
  6,404
  6,831
  7,217
  7,622
  8,049
  8,498
  8,971
  9,469
  9,992
  10,544
  11,124
  11,734
  12,376
  13,051
  13,762
  14,510
  15,296
  16,124
  16,994
  17,909
  18,872
Net income, $m
  10,251
  10,991
  11,647
  12,337
  13,063
  13,828
  14,634
  15,482
  16,374
  17,314
  18,470
  19,511
  20,608
  21,762
  22,977
  24,255
  25,601
  27,017
  28,507
  30,075
  31,725
  33,461
  35,287
  37,209
  39,230
  41,357
  43,594
  45,947
  48,422
  51,025

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  46,801
  49,183
  51,682
  54,303
  57,054
  59,941
  62,970
  66,148
  69,484
  72,985
  76,660
  80,517
  84,565
  88,815
  93,276
  97,959
  102,875
  108,036
  113,454
  119,143
  125,114
  131,384
  137,966
  144,876
  152,131
  159,749
  167,747
  176,144
  184,960
  194,217
Adjusted assets (=assets-cash), $m
  46,801
  49,183
  51,682
  54,303
  57,054
  59,941
  62,970
  66,148
  69,484
  72,985
  76,660
  80,517
  84,565
  88,815
  93,276
  97,959
  102,875
  108,036
  113,454
  119,143
  125,114
  131,384
  137,966
  144,876
  152,131
  159,749
  167,747
  176,144
  184,960
  194,217
Revenue / Adjusted assets
  2.266
  2.266
  2.266
  2.266
  2.266
  2.266
  2.266
  2.266
  2.266
  2.266
  2.266
  2.266
  2.266
  2.266
  2.266
  2.266
  2.266
  2.266
  2.266
  2.266
  2.266
  2.266
  2.266
  2.266
  2.266
  2.266
  2.266
  2.266
  2.266
  2.266
Average production assets, $m
  24,285
  25,522
  26,818
  28,179
  29,606
  31,104
  32,676
  34,325
  36,056
  37,873
  39,780
  41,781
  43,882
  46,087
  48,402
  50,832
  53,384
  56,062
  58,873
  61,825
  64,923
  68,177
  71,592
  75,178
  78,943
  82,896
  87,046
  91,404
  95,978
  100,782
Working capital, $m
  2,015
  2,118
  2,225
  2,338
  2,456
  2,581
  2,711
  2,848
  2,992
  3,142
  3,301
  3,467
  3,641
  3,824
  4,016
  4,218
  4,429
  4,651
  4,885
  5,130
  5,387
  5,657
  5,940
  6,237
  6,550
  6,878
  7,222
  7,584
  7,963
  8,362
Total debt, $m
  26,074
  28,217
  30,467
  32,826
  35,302
  37,900
  40,626
  43,486
  46,489
  49,640
  52,947
  56,418
  60,062
  63,887
  67,902
  72,116
  76,541
  81,186
  86,062
  91,181
  96,556
  102,198
  108,122
  114,342
  120,871
  127,727
  134,925
  142,482
  150,417
  158,748
Total liabilities, $m
  42,121
  44,264
  46,514
  48,873
  51,349
  53,947
  56,673
  59,533
  62,536
  65,687
  68,994
  72,465
  76,109
  79,934
  83,949
  88,163
  92,588
  97,233
  102,109
  107,228
  112,603
  118,245
  124,169
  130,389
  136,918
  143,774
  150,972
  158,529
  166,464
  174,795
Total equity, $m
  4,680
  4,918
  5,168
  5,430
  5,705
  5,994
  6,297
  6,615
  6,948
  7,299
  7,666
  8,052
  8,457
  8,882
  9,328
  9,796
  10,288
  10,804
  11,345
  11,914
  12,511
  13,138
  13,797
  14,488
  15,213
  15,975
  16,775
  17,614
  18,496
  19,422
Total liabilities and equity, $m
  46,801
  49,182
  51,682
  54,303
  57,054
  59,941
  62,970
  66,148
  69,484
  72,986
  76,660
  80,517
  84,566
  88,816
  93,277
  97,959
  102,876
  108,037
  113,454
  119,142
  125,114
  131,383
  137,966
  144,877
  152,131
  159,749
  167,747
  176,143
  184,960
  194,217
Debt-to-equity ratio
  5.570
  5.740
  5.900
  6.040
  6.190
  6.320
  6.450
  6.570
  6.690
  6.800
  6.910
  7.010
  7.100
  7.190
  7.280
  7.360
  7.440
  7.510
  7.590
  7.650
  7.720
  7.780
  7.840
  7.890
  7.950
  8.000
  8.040
  8.090
  8.130
  8.170
Adjusted equity ratio
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  10,251
  10,991
  11,647
  12,337
  13,063
  13,828
  14,634
  15,482
  16,374
  17,314
  18,470
  19,511
  20,608
  21,762
  22,977
  24,255
  25,601
  27,017
  28,507
  30,075
  31,725
  33,461
  35,287
  37,209
  39,230
  41,357
  43,594
  45,947
  48,422
  51,025
Depreciation, amort., depletion, $m
  2,303
  2,409
  2,520
  2,636
  2,758
  2,886
  3,020
  3,161
  3,309
  3,465
  3,400
  3,571
  3,751
  3,939
  4,137
  4,345
  4,563
  4,792
  5,032
  5,284
  5,549
  5,827
  6,119
  6,425
  6,747
  7,085
  7,440
  7,812
  8,203
  8,614
Funds from operations, $m
  12,554
  13,400
  14,166
  14,973
  15,821
  16,714
  17,654
  18,643
  19,684
  20,779
  21,870
  23,082
  24,358
  25,701
  27,114
  28,600
  30,163
  31,808
  33,539
  35,359
  37,274
  39,288
  41,406
  43,634
  45,977
  48,442
  51,033
  53,759
  56,625
  59,638
Change in working capital, $m
  98
  103
  108
  113
  118
  124
  130
  137
  144
  151
  158
  166
  174
  183
  192
  202
  212
  222
  233
  245
  257
  270
  283
  298
  312
  328
  344
  362
  380
  399
Cash from operations, $m
  12,456
  13,298
  14,059
  14,860
  15,703
  16,590
  17,523
  18,506
  19,540
  20,628
  21,712
  22,916
  24,184
  25,518
  26,922
  28,398
  29,952
  31,586
  33,305
  35,114
  37,017
  39,018
  41,123
  43,337
  45,665
  48,114
  50,689
  53,397
  56,245
  59,240
Maintenance CAPEX, $m
  -1,973
  -2,076
  -2,181
  -2,292
  -2,408
  -2,530
  -2,658
  -2,793
  -2,934
  -3,082
  -3,237
  -3,400
  -3,571
  -3,751
  -3,939
  -4,137
  -4,345
  -4,563
  -4,792
  -5,032
  -5,284
  -5,549
  -5,827
  -6,119
  -6,425
  -6,747
  -7,085
  -7,440
  -7,812
  -8,203
New CAPEX, $m
  -1,199
  -1,236
  -1,297
  -1,360
  -1,427
  -1,498
  -1,572
  -1,649
  -1,731
  -1,817
  -1,907
  -2,001
  -2,101
  -2,205
  -2,315
  -2,430
  -2,551
  -2,678
  -2,811
  -2,952
  -3,099
  -3,253
  -3,416
  -3,586
  -3,765
  -3,953
  -4,150
  -4,357
  -4,575
  -4,803
Cash from investing activities, $m
  -3,172
  -3,312
  -3,478
  -3,652
  -3,835
  -4,028
  -4,230
  -4,442
  -4,665
  -4,899
  -5,144
  -5,401
  -5,672
  -5,956
  -6,254
  -6,567
  -6,896
  -7,241
  -7,603
  -7,984
  -8,383
  -8,802
  -9,243
  -9,705
  -10,190
  -10,700
  -11,235
  -11,797
  -12,387
  -13,006
Free cash flow, $m
  9,284
  9,986
  10,581
  11,207
  11,867
  12,562
  13,293
  14,064
  14,875
  15,729
  16,568
  17,515
  18,512
  19,562
  20,668
  21,831
  23,056
  24,345
  25,702
  27,131
  28,634
  30,215
  31,880
  33,632
  35,475
  37,414
  39,454
  41,600
  43,858
  46,233
Issuance/(repayment) of debt, $m
  -954
  2,144
  2,249
  2,360
  2,476
  2,598
  2,726
  2,861
  3,002
  3,151
  3,307
  3,471
  3,644
  3,825
  4,015
  4,215
  4,425
  4,645
  4,876
  5,119
  5,374
  5,642
  5,924
  6,219
  6,530
  6,856
  7,198
  7,557
  7,935
  8,331
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -954
  2,144
  2,249
  2,360
  2,476
  2,598
  2,726
  2,861
  3,002
  3,151
  3,307
  3,471
  3,644
  3,825
  4,015
  4,215
  4,425
  4,645
  4,876
  5,119
  5,374
  5,642
  5,924
  6,219
  6,530
  6,856
  7,198
  7,557
  7,935
  8,331
Total cash flow (excl. dividends), $m
  8,330
  12,130
  12,830
  13,567
  14,342
  15,159
  16,019
  16,924
  17,877
  18,880
  19,875
  20,986
  22,156
  23,387
  24,682
  26,046
  27,480
  28,990
  30,579
  32,250
  34,008
  35,858
  37,804
  39,851
  42,004
  44,269
  46,652
  49,158
  51,793
  54,564
Retained Cash Flow (-), $m
  -3,226
  -238
  -250
  -262
  -275
  -289
  -303
  -318
  -334
  -350
  -367
  -386
  -405
  -425
  -446
  -468
  -492
  -516
  -542
  -569
  -597
  -627
  -658
  -691
  -726
  -762
  -800
  -840
  -882
  -926
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  5,104
  11,892
  12,580
  13,304
  14,067
  14,871
  15,716
  16,607
  17,544
  18,530
  19,507
  20,601
  21,751
  22,962
  24,236
  25,578
  26,989
  28,474
  30,037
  31,681
  33,411
  35,231
  37,146
  39,160
  41,279
  43,508
  45,852
  48,318
  50,911
  53,639
Discount rate, %
  7.80
  8.19
  8.60
  9.03
  9.48
  9.95
  10.45
  10.98
  11.52
  12.10
  12.71
  13.34
  14.01
  14.71
  15.44
  16.22
  17.03
  17.88
  18.77
  19.71
  20.70
  21.73
  22.82
  23.96
  25.16
  26.41
  27.73
  29.12
  30.58
  32.11
PV of cash for distribution, $m
  4,734
  10,159
  9,822
  9,415
  8,944
  8,415
  7,836
  7,219
  6,574
  5,913
  5,234
  4,584
  3,957
  3,363
  2,811
  2,310
  1,864
  1,475
  1,143
  867
  643
  466
  329
  226
  151
  98
  62
  38
  22
  13
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

The Home Depot, Inc. (The Home Depot) is a home improvement retailer. The Company sells an assortment of building materials, home improvement products, and lawn and garden products, and provides various services. The Home Depot stores serves three primary customer groups: do-it-yourself (DIY) customers, do-it-for-me (DIFM) customers and professional customers. Its DIY customers are home owners purchasing products and completing their own projects and installations. The Company assists these customers with specific product and installation questions both in its stores and through online resources and other media designed to provide product and project knowledge. Its DIFM customers are home owners purchasing materials themselves and hiring third parties to complete the project or installation. Professional Customers are primarily professional renovators/remodelers, general contractors, repairmen, installers, small business owners and tradesmen.

FINANCIAL RATIOS  of  Home Depot, Inc. (The) (HD)

Valuation Ratios
P/E Ratio 31.1
Price to Sales 2.6
Price to Book 57.1
Price to Tangible Book
Price to Cash Flow 25.3
Price to Free Cash Flow 30.3
Growth Rates
Sales Growth Rate 6.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 7.9%
Cap. Spend. - 3 Yr. Gr. Rate 3.1%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 515.8%
Total Debt to Equity 544.7%
Interest Coverage 15
Management Effectiveness
Return On Assets 20.1%
Ret/ On Assets - 3 Yr. Avg. 18.5%
Return On Total Capital 28.7%
Ret/ On T. Cap. - 3 Yr. Avg. 26.1%
Return On Equity 149.4%
Return On Equity - 3 Yr. Avg. 99.1%
Asset Turnover 2.2
Profitability Ratios
Gross Margin 34.2%
Gross Margin - 3 Yr. Avg. 34.2%
EBITDA Margin 16.3%
EBITDA Margin - 3 Yr. Avg. 15.6%
Operating Margin 14.2%
Oper. Margin - 3 Yr. Avg. 13.4%
Pre-Tax Margin 13.2%
Pre-Tax Margin - 3 Yr. Avg. 12.5%
Net Profit Margin 8.4%
Net Profit Margin - 3 Yr. Avg. 8%
Effective Tax Rate 36.3%
Eff/ Tax Rate - 3 Yr. Avg. 36.4%
Payout Ratio 42.8%

HD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HD stock intrinsic value calculation we used $100904 million for the last fiscal year's total revenue generated by Home Depot, Inc. (The). The default revenue input number comes from 0001 income statement of Home Depot, Inc. (The). You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our HD stock valuation model: a) initial revenue growth rate of 5.1% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 7.8%, whose default value for HD is calculated based on our internal credit rating of Home Depot, Inc. (The), is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Home Depot, Inc. (The).
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of HD stock the variable cost ratio is equal to 80.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $5493 million in the base year in the intrinsic value calculation for HD stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Home Depot, Inc. (The).

Corporate tax rate of 27% is the nominal tax rate for Home Depot, Inc. (The). In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the HD stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for HD are equal to 22.9%.

Life of production assets of 11.7 years is the average useful life of capital assets used in Home Depot, Inc. (The) operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for HD is equal to 1.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1454 million for Home Depot, Inc. (The) - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 1129.507 million for Home Depot, Inc. (The) is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Home Depot, Inc. (The) at the current share price and the inputted number of shares is $232.3 billion.

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