Home Depot(US:HD) Soochow Securities international·2024-06-12 02:01Investment Rating - The report assigns a "Neutral" rating for The Home Depot (HD.N) [1] Core Views - The Home Depot is the leading home improvement retailer in the U.S., with a significant focus on the MRO (Maintenance, Repair, and Operations) business, which is expected to open new growth opportunities and synergize with its PRO (Professional) business [3][30] - The MRO business is still in its early stages, with estimated revenues of approximately $6 billion, representing a low single-digit percentage of the company's overall revenue [3][30] - The company anticipates a potential market space exceeding $100 billion for MRO, with the overall home improvement retail market stabilizing around $500 billion [3][30] Summary by Sections Company Overview - The Home Depot operates over 2,300 large hardware stores across the U.S., Canada, and Mexico, providing a wide range of building materials, home improvement products, and MRO products [10][12] - More than 90% of the company's revenue comes from the U.S., with its main product lines being building materials, decorative materials, and tools, contributing 37%, 33%, and 30% of revenue respectively in 2023 [12][16] MRO Business Growth - The MRO business is expected to enhance the company's growth potential and better develop the PRO business, creating a unique B2B platform [3][30] - The MRO market is highly fragmented, and The Home Depot's established retail and PRO business provides a competitive edge over smaller regional distributors [39][41] Financial Forecast and Valuation - The report forecasts revenue growth for FY2024-2026 at 1.0%, 1.9%, and 2.5%, reaching $154.2 billion, $157.1 billion, and $160.9 billion respectively [46][48] - Net profit is projected to decline by 8.03% in FY2024, followed by increases of 13.67% and 3.27% in FY2025 and FY2026, reaching $15.7 billion, $17.8 billion, and $18.5 billion respectively [46][48] - Corresponding EPS is expected to be $15.9, $18.0, and $18.6, with P/E ratios of 21.0, 18.5, and 17.9 for the respective years [46][48]