Home Depot(HD) ZACKS·2025-02-20 18:50Core Viewpoint - Home Depot is expected to report increased revenues and earnings for the fourth quarter of fiscal 2024, driven by strategic acquisitions and improved seasonal demand [1][2][5]. Financial Performance - The Zacks Consensus Estimate for fourth-quarter revenues is 3.08, indicating a 9.2% increase from the previous year [2]. - Home Depot has shown a positive earnings surprise trend, with an average surprise of 2.3% over the last four quarters [3]. Strategic Initiatives - The acquisition of SRS Distribution Inc. is expected to contribute significantly to sales growth [5][6]. - The "One Home Depot" investment strategy focuses on supply-chain expansion and digital improvements, enhancing online traffic and sales [7][19]. - The company anticipates a 4% year-over-year sales increase for fiscal 2024, supported by additional sales from the 53rd week and SRS [6]. Market Challenges - Higher interest rates and macroeconomic uncertainty are anticipated to negatively impact consumer demand for home improvement projects [8][20]. - Comparable customer transactions are projected to decline by 2.5% for fiscal 2024, affecting overall sales performance [9]. Margin and Valuation - Home Depot's gross margin is projected at 33.5% for fiscal 2024, with an operating margin of 13.5% [10][11]. - The stock trades at a forward P/E multiple of 25.23X, above the industry average of 23.12X, indicating a premium valuation [16]. Competitive Position - Home Depot's stock has gained 8.6% over the past year, underperforming compared to the broader industry and S&P 500 [12][13]. - The company maintains a competitive edge through its interconnected retail strategy and strong Pro customer growth [18][19].