Home Depot Is Capable of Delivering More Upside

Home Depot (HD) has performed consistently well this year as the stock has gained more than 17%. Going forward, I believe that the improvement in Home Depot’s financial performance will continue since the company is taking smart steps in order to improve the financial performance.

Impressive growth across the board

Home Depot has witnessed satisfactory improvement across all three of its U.S. divisions posting mid-single-digit increases or greater, its Western segment was the top performing segment with a solid lineup of orders from major markets such as Seattle, Colorado, Sacramento and San Francisco.
Home Depot recorded solid comp growth across all 19 of its major U.S. regions during the quarter.

Both transactions and tickets improved in the quarter with particularly solid transaction expansion. Moreover, the company’s key segments and all of its seasonal businesses contributed significantly to its performance.

Globally, both the company’s Canadian and Mexican businesses surpassed its performance expectations for the quarter. Home Depot recorded double-digit local currency comps growth in Mexico and thus achieving 46 successive quarters of positive comps. And, it achieved 14 successive quarters of local currency comps growth in Canada as well.

The notable expansion in comps growths across Canada and Mexico signifies strong growth strategy being implemented by the company and further supported by the ongoing improvement in the global homebuilding markets .

Improving the distribution network

Home Depot is also interlinking its distribution networks to increasingly satisfy the customers' demand for superior home improvements. It has started displaying the ability to flow buy online ship to store orders by leveraging its quick operation centers or RDCs, developing enhanced flow to its stores.

Earlier this year, Home Depot’s online sales expanded approximately 30% and with its digital properties being its essential storefront, the online traffic grew in double-digits for the quarter. Going forward, Home Depot targets on continuing to invest significantly in growing its online search portal and developing a smooth transaction throughout its key channels.

In addition, the Pro Heavy segments illustrated superior performance with double-digit growths in Power Tool, Fencing, Commercial Lighting and Siding Accessories. Additionally, insulation and fasteners, board, concrete, tile-setting materials, windows, compressors and pressure-treated decking all achieved solid comp growths more than the company average.


In light of Home Depot’s attractive valuation and the company’s impressive growth moves, it makes sense to buy the stock for the long run. This is because despite gaining impressively this year, Home Depot can log further gains going forward, which makes the stock an enticing investment.
Published on Oct 21, 2015
By Vinay Singh

Copyrighted 2020. Content published with author's permission.

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