Intrinsic value of Home Depot - HD

Previous Close

$186.97

  Intrinsic Value

$121.68

stock screener

  Rating & Target

sell

-35%

Previous close

$186.97

 
Intrinsic value

$121.68

 
Up/down potential

-35%

 
Rating

sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

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.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of Home Depot (HD) stock.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  6.86
  8.10
  7.79
  7.51
  7.26
  7.03
  6.83
  6.65
  6.48
  6.33
  6.20
  6.08
  5.97
  5.88
  5.79
  5.71
  5.64
  5.57
  5.52
  5.47
  5.42
  5.38
  5.34
  5.31
  5.27
  5.25
  5.22
  5.20
  5.18
  5.16
  5.15
Revenue, $m
  94,595
  102,257
  110,223
  118,502
  127,105
  136,045
  145,338
  154,999
  165,048
  175,502
  186,385
  197,719
  209,529
  221,840
  234,680
  248,078
  262,065
  276,674
  291,938
  307,893
  324,577
  342,029
  360,291
  379,405
  399,418
  420,377
  442,331
  465,333
  489,439
  514,705
  541,192
Variable operating expenses, $m
 
  74,426
  80,208
  86,216
  92,461
  98,949
  105,694
  112,706
  119,999
  127,587
  135,485
  143,502
  152,073
  161,008
  170,327
  180,052
  190,204
  200,806
  211,885
  223,465
  235,574
  248,241
  261,495
  275,368
  289,893
  305,104
  321,038
  337,733
  355,229
  373,566
  392,790
Fixed operating expenses, $m
 
  12,931
  13,255
  13,586
  13,926
  14,274
  14,631
  14,996
  15,371
  15,756
  16,150
  16,553
  16,967
  17,391
  17,826
  18,272
  18,729
  19,197
  19,677
  20,169
  20,673
  21,190
  21,719
  22,262
  22,819
  23,389
  23,974
  24,573
  25,188
  25,817
  26,463
Total operating expenses, $m
  81,168
  87,357
  93,463
  99,802
  106,387
  113,223
  120,325
  127,702
  135,370
  143,343
  151,635
  160,055
  169,040
  178,399
  188,153
  198,324
  208,933
  220,003
  231,562
  243,634
  256,247
  269,431
  283,214
  297,630
  312,712
  328,493
  345,012
  362,306
  380,417
  399,383
  419,253
Operating income, $m
  13,427
  14,900
  16,761
  18,699
  20,719
  22,822
  25,014
  27,297
  29,677
  32,160
  34,750
  37,664
  40,488
  43,440
  46,526
  49,754
  53,133
  56,671
  60,376
  64,260
  68,330
  72,599
  77,077
  81,775
  86,707
  91,883
  97,319
  103,027
  109,023
  115,321
  121,939
EBITDA, $m
  15,400
  17,062
  19,075
  21,172
  23,356
  25,630
  27,999
  30,467
  33,039
  35,721
  38,519
  41,440
  44,490
  47,677
  51,008
  54,492
  58,138
  61,955
  65,952
  70,140
  74,529
  79,131
  83,958
  89,021
  94,335
  99,912
  105,766
  111,914
  118,370
  125,151
  132,275
Interest expense (income), $m
  924
  916
  996
  1,122
  1,252
  1,388
  1,529
  1,676
  1,828
  1,986
  2,151
  2,323
  2,502
  2,688
  2,882
  3,084
  3,296
  3,516
  3,747
  3,987
  4,239
  4,502
  4,777
  5,065
  5,367
  5,682
  6,013
  6,359
  6,722
  7,102
  7,500
Earnings before tax, $m
  12,491
  13,983
  15,764
  17,578
  19,466
  21,434
  23,485
  25,621
  27,850
  30,174
  32,599
  35,341
  37,987
  40,752
  43,644
  46,670
  49,837
  53,154
  56,630
  60,272
  64,091
  68,097
  72,300
  76,710
  81,340
  86,201
  91,306
  96,668
  102,301
  108,219
  114,438
Tax expense, $m
  4,534
  3,775
  4,256
  4,746
  5,256
  5,787
  6,341
  6,918
  7,519
  8,147
  8,802
  9,542
  10,256
  11,003
  11,784
  12,601
  13,456
  14,352
  15,290
  16,274
  17,305
  18,386
  19,521
  20,712
  21,962
  23,274
  24,653
  26,100
  27,621
  29,219
  30,898
Net income, $m
  7,957
  10,208
  11,508
  12,832
  14,210
  15,647
  17,144
  18,704
  20,330
  22,027
  23,797
  25,799
  27,730
  29,749
  31,860
  34,069
  36,381
  38,803
  41,340
  43,999
  46,787
  49,711
  52,779
  55,998
  59,378
  62,927
  66,653
  70,568
  74,680
  79,000
  83,540

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  2,538
  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
  42,966
  43,700
  47,104
  50,642
  54,318
  58,139
  62,110
  66,239
  70,533
  75,001
  79,652
  84,495
  89,542
  94,803
  100,290
  106,016
  111,994
  118,237
  124,760
  131,578
  138,708
  146,166
  153,970
  162,139
  170,691
  179,648
  189,030
  198,860
  209,162
  219,959
  231,279
Adjusted assets (=assets-cash), $m
  40,428
  43,700
  47,104
  50,642
  54,318
  58,139
  62,110
  66,239
  70,533
  75,001
  79,652
  84,495
  89,542
  94,803
  100,290
  106,016
  111,994
  118,237
  124,760
  131,578
  138,708
  146,166
  153,970
  162,139
  170,691
  179,648
  189,030
  198,860
  209,162
  219,959
  231,279
Revenue / Adjusted assets
  2.340
  2.340
  2.340
  2.340
  2.340
  2.340
  2.340
  2.340
  2.340
  2.340
  2.340
  2.340
  2.340
  2.340
  2.340
  2.340
  2.340
  2.340
  2.340
  2.340
  2.340
  2.340
  2.340
  2.340
  2.340
  2.340
  2.340
  2.340
  2.340
  2.340
  2.340
Average production assets, $m
  22,053
  23,826
  25,682
  27,611
  29,615
  31,699
  33,864
  36,115
  38,456
  40,892
  43,428
  46,069
  48,820
  51,689
  54,680
  57,802
  61,061
  64,465
  68,022
  71,739
  75,626
  79,693
  83,948
  88,401
  93,064
  97,948
  103,063
  108,423
  114,039
  119,926
  126,098
Working capital, $m
  3,591
  2,454
  2,645
  2,844
  3,051
  3,265
  3,488
  3,720
  3,961
  4,212
  4,473
  4,745
  5,029
  5,324
  5,632
  5,954
  6,290
  6,640
  7,007
  7,389
  7,790
  8,209
  8,647
  9,106
  9,586
  10,089
  10,616
  11,168
  11,747
  12,353
  12,989
Total debt, $m
  23,601
  24,298
  27,361
  30,546
  33,855
  37,293
  40,867
  44,583
  48,448
  52,469
  56,655
  61,014
  65,556
  70,291
  75,229
  80,383
  85,762
  91,381
  97,252
  103,388
  109,805
  116,518
  123,541
  130,893
  138,590
  146,651
  155,095
  163,942
  173,214
  182,931
  193,119
Total liabilities, $m
  38,633
  39,330
  42,393
  45,578
  48,887
  52,325
  55,899
  59,615
  63,480
  67,501
  71,687
  76,046
  80,588
  85,323
  90,261
  95,415
  100,794
  106,413
  112,284
  118,420
  124,837
  131,550
  138,573
  145,925
  153,622
  161,683
  170,127
  178,974
  188,246
  197,963
  208,151
Total equity, $m
  4,333
  4,370
  4,710
  5,064
  5,432
  5,814
  6,211
  6,624
  7,053
  7,500
  7,965
  8,450
  8,954
  9,480
  10,029
  10,602
  11,199
  11,824
  12,476
  13,158
  13,871
  14,617
  15,397
  16,214
  17,069
  17,965
  18,903
  19,886
  20,916
  21,996
  23,128
Total liabilities and equity, $m
  42,966
  43,700
  47,103
  50,642
  54,319
  58,139
  62,110
  66,239
  70,533
  75,001
  79,652
  84,496
  89,542
  94,803
  100,290
  106,017
  111,993
  118,237
  124,760
  131,578
  138,708
  146,167
  153,970
  162,139
  170,691
  179,648
  189,030
  198,860
  209,162
  219,959
  231,279
Debt-to-equity ratio
  5.447
  5.560
  5.810
  6.030
  6.230
  6.410
  6.580
  6.730
  6.870
  7.000
  7.110
  7.220
  7.320
  7.410
  7.500
  7.580
  7.660
  7.730
  7.800
  7.860
  7.920
  7.970
  8.020
  8.070
  8.120
  8.160
  8.200
  8.240
  8.280
  8.320
  8.350
Adjusted equity ratio
  0.062
  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
  7,957
  10,208
  11,508
  12,832
  14,210
  15,647
  17,144
  18,704
  20,330
  22,027
  23,797
  25,799
  27,730
  29,749
  31,860
  34,069
  36,381
  38,803
  41,340
  43,999
  46,787
  49,711
  52,779
  55,998
  59,378
  62,927
  66,653
  70,568
  74,680
  79,000
  83,540
Depreciation, amort., depletion, $m
  1,973
  2,162
  2,314
  2,472
  2,637
  2,808
  2,985
  3,170
  3,361
  3,561
  3,769
  3,776
  4,002
  4,237
  4,482
  4,738
  5,005
  5,284
  5,576
  5,880
  6,199
  6,532
  6,881
  7,246
  7,628
  8,029
  8,448
  8,887
  9,347
  9,830
  10,336
Funds from operations, $m
  9,486
  12,370
  13,822
  15,304
  16,847
  18,455
  20,129
  21,873
  23,692
  25,588
  27,566
  29,575
  31,732
  33,986
  36,342
  38,807
  41,386
  44,087
  46,915
  49,879
  52,986
  56,243
  59,660
  63,244
  67,006
  70,955
  75,101
  79,455
  84,027
  88,830
  93,876
Change in working capital, $m
  -297
  184
  191
  199
  206
  215
  223
  232
  241
  251
  261
  272
  283
  295
  308
  322
  336
  351
  366
  383
  400
  419
  438
  459
  480
  503
  527
  552
  579
  606
  636
Cash from operations, $m
  9,783
  12,186
  13,631
  15,105
  16,641
  18,240
  19,906
  21,641
  23,450
  25,337
  27,305
  29,303
  31,449
  33,690
  36,034
  38,485
  41,051
  43,736
  46,549
  49,496
  52,585
  55,824
  59,221
  62,786
  66,526
  70,452
  74,574
  78,903
  83,449
  88,224
  93,240
Maintenance CAPEX, $m
  0
  -1,808
  -1,953
  -2,105
  -2,263
  -2,427
  -2,598
  -2,776
  -2,960
  -3,152
  -3,352
  -3,560
  -3,776
  -4,002
  -4,237
  -4,482
  -4,738
  -5,005
  -5,284
  -5,576
  -5,880
  -6,199
  -6,532
  -6,881
  -7,246
  -7,628
  -8,029
  -8,448
  -8,887
  -9,347
  -9,830
New CAPEX, $m
  -1,621
  -1,773
  -1,856
  -1,929
  -2,005
  -2,083
  -2,165
  -2,251
  -2,341
  -2,436
  -2,536
  -2,641
  -2,752
  -2,868
  -2,992
  -3,122
  -3,259
  -3,404
  -3,557
  -3,718
  -3,887
  -4,066
  -4,255
  -4,454
  -4,663
  -4,883
  -5,115
  -5,360
  -5,617
  -5,887
  -6,171
Cash from investing activities, $m
  -1,583
  -3,581
  -3,809
  -4,034
  -4,268
  -4,510
  -4,763
  -5,027
  -5,301
  -5,588
  -5,888
  -6,201
  -6,528
  -6,870
  -7,229
  -7,604
  -7,997
  -8,409
  -8,841
  -9,294
  -9,767
  -10,265
  -10,787
  -11,335
  -11,909
  -12,511
  -13,144
  -13,808
  -14,504
  -15,234
  -16,001
Free cash flow, $m
  8,200
  8,605
  9,822
  11,071
  12,373
  13,729
  15,142
  16,615
  18,149
  19,749
  21,418
  23,103
  24,921
  26,820
  28,806
  30,882
  33,054
  35,327
  37,708
  40,203
  42,818
  45,559
  48,434
  51,451
  54,617
  57,941
  61,430
  65,095
  68,945
  72,989
  77,239
Issuance/(repayment) of debt, $m
  2,274
  1,949
  3,064
  3,184
  3,309
  3,439
  3,574
  3,716
  3,865
  4,021
  4,186
  4,359
  4,542
  4,735
  4,938
  5,153
  5,380
  5,619
  5,871
  6,137
  6,417
  6,712
  7,024
  7,352
  7,697
  8,061
  8,444
  8,847
  9,271
  9,718
  10,187
Issuance/(repurchase) of shares, $m
  -6,662
  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  
  -4,466
  1,949
  3,064
  3,184
  3,309
  3,439
  3,574
  3,716
  3,865
  4,021
  4,186
  4,359
  4,542
  4,735
  4,938
  5,153
  5,380
  5,619
  5,871
  6,137
  6,417
  6,712
  7,024
  7,352
  7,697
  8,061
  8,444
  8,847
  9,271
  9,718
  10,187
Total cash flow (excl. dividends), $m
  3,726
  10,554
  12,886
  14,256
  15,682
  17,168
  18,716
  20,330
  22,014
  23,770
  25,603
  27,462
  29,463
  31,555
  33,744
  36,035
  38,433
  40,946
  43,579
  46,340
  49,235
  52,271
  55,458
  58,803
  62,314
  66,002
  69,874
  73,942
  78,216
  82,707
  87,426
Retained Cash Flow (-), $m
  1,983
  -1,323
  -340
  -354
  -368
  -382
  -397
  -413
  -429
  -447
  -465
  -484
  -505
  -526
  -549
  -573
  -598
  -624
  -652
  -682
  -713
  -746
  -780
  -817
  -855
  -896
  -938
  -983
  -1,030
  -1,080
  -1,132
Prev. year cash balance distribution, $m
 
  1,286
  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
 
  10,517
  12,546
  13,902
  15,314
  16,786
  18,319
  19,918
  21,584
  23,323
  25,138
  26,977
  28,958
  31,029
  33,195
  35,462
  37,836
  40,322
  42,927
  45,658
  48,522
  51,526
  54,678
  57,986
  61,459
  65,106
  68,936
  72,959
  77,186
  81,627
  86,294
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
 
  9,756
  10,718
  10,854
  10,837
  10,672
  10,366
  9,931
  9,383
  8,739
  8,022
  7,238
  6,444
  5,645
  4,861
  4,114
  3,417
  2,784
  2,223
  1,738
  1,328
  992
  723
  513
  355
  238
  156
  98
  60
  36
  20
Current shareholders' claim on cash, %
  100
  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 (HD)

Valuation Ratios
P/E Ratio 28.3
Price to Sales 2.4
Price to Book 51.9
Price to Tangible Book
Price to Cash Flow 23
Price to Free Cash Flow 27.6
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 $94595 million for the last fiscal year's total revenue generated by Home Depot. The default revenue input number comes from 2017 income statement of Home Depot. 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 8.1% 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, 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.
    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 72.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $12616 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 4.1% for Home Depot.

Corporate tax rate of 27% is the nominal tax rate for Home Depot. 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 23.3%.

Life of production assets of 12.2 years is the average useful life of capital assets used in Home Depot 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 2.4%. 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 - $4333 million for Home Depot - 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 1169.31 million for Home Depot 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 at the current share price and the inputted number of shares is $218.6 billion.

RELATED COMPANIES Price Int.Val. Rating
LOW Lowe's 96.31 69.99  sell
SHOS Sears Hometown 2.15 3.23  buy

COMPANY NEWS

▶ Home Depot reports strong quarter   [11:30AM  CNBC Videos]
▶ Home Depot posts record results, now a $100 billion-a-year business   [10:27AM  American City Business Journals]
▶ How Do These Retailers Match Up?   [10:22AM  Zacks]
▶ A Tale of Two Retailers   [10:18AM  Zacks]
▶ Stocks Slip As Walmart Drags On Dow; NXP Soars On Qualcomm Bid   [09:40AM  Investor's Business Daily]
▶ Home Depot Earnings Top On Strong Same-Store Sales   [09:33AM  Investor's Business Daily]
▶ Home Depot beats on top and bottom lines   [06:04AM  CNBC Videos]
▶ 3 Things to Watch in the Stock Market This Week   [Feb-18-18 07:12PM  Motley Fool]
▶ [$$] Walmart, UK bank results, EU meetings   [01:13AM  Financial Times]
▶ What Will Retail Earnings Show?   [Feb-16-18 06:20PM  Zacks]
▶ Home Depot re-tools interview process in latest attempt to attract new hires   [Feb-15-18 11:10AM  American City Business Journals]
▶ Is The Home Depot Inc (NYSE:HD) A Good Dividend Stock?   [Feb-14-18 05:39PM  Simply Wall St.]
▶ The Afternoon Rundown: February 14, 2018   [02:31PM  CNBC Videos]
▶ Factbox - U.S. tax overhaul: Winners and losers   [Feb-13-18 05:07PM  Reuters]
▶ [$$] Equifax Hires New Chief Information Security Officer   [05:29PM  The Wall Street Journal]
▶ 3 Amazing Dividend Stocks to Buy With the Dow in Turmoil   [Feb-09-18 06:00PM  TheStreet.com]
▶ Have to address entitlements in America: Ken Langone   [09:47AM  Fox Business Videos]
▶ Home Depot Has a Shaky Foundation   [04:59PM  TheStreet.com]
▶ A Brief History of Retail   [11:19AM  MarketWatch]
▶ Calculating The Fair Value Of The Home Depot Inc (NYSE:HD)   [Feb-06-18 08:09PM  Simply Wall St.]
▶ Jefferies upgrades Lowe's to 'buy'   [12:25PM  CNBC Videos]
▶ Tesla kiosks coming to a Home Depot near you   [Feb-02-18 01:47PM  Yahoo Finance Video]
▶ Amazon's growth unstoppable?   [11:31AM  Fox Business Videos]
▶ Yahoo Finance Live: Midday Movers - Feb 2nd, 2018   [09:40AM  Yahoo Finance Video]
▶ Motley Fool ETF Looks to Buy-Rated Fare   [01:05PM  ETF Trends]
▶ The Beverage Industry Gets a Little Smaller   [Jan-30-18 11:05PM  Motley Fool]
Financial statements of HD
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