Yahoo Finance The Home Depot, Inc. Analysts Are Pretty Bullish On The Stock After Recent Results
The Home Depot, Inc. (NYSE:HD) shares fell 4.8% to US$235 in the week since its latest annual results. Results were roughly in line with estimates, with revenues of US$110b and statutory earnings per share of US$10.25. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
View our latest analysis for Home Depot
After the latest results, the 28 analysts covering Home Depot are now predicting revenues of US$114.7b in 2021. If met, this would reflect a satisfactory 4.0% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to rise 3.5% to US$10.65. Yet prior to the latest earnings, analysts had been forecasting revenues of US$114.6b and earnings per share (EPS) of US$10.55 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
The consensus price target rose 5.6% to US$253 despite there being no meaningful change to earnings estimates. It could be that analysts are reflecting the predictability of Home Depot's earnings by assigning a price premium. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Home Depot analyst has a price target of US$288 per share, while the most pessimistic values it at US$170. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Home Depot shareholders.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Home Depot's past performance and to peers in the same market. We would highlight that Home Depot's revenue growth is expected to slow, with forecast 4.0% increase next year well below the historical 6.1%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 6.0% per year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than Home Depot.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Home Depot's revenues are expected to perform worse than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Home Depot analysts - going out to 2025, and you can see them free on our platform here.
You can also see whether Home Depot is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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