Asset structure analysis
The Home Depot’s total assets were $76.53 billion and $76.45 billion as of January 28, 2024 and January 29, 2023, respectively.
Net property and equipment was $26.15 billion at January 28, 2024, accounting for 34.17% of total assets.
Operating lease right-of-use assets were $7.9 billion as of January 28, 2024, constituting 10.3% of total assets.
Goodwill was $8.46 billion at January 28, 2024, consisting of 11% of total assets.
Other assets were $4.26 billion at January 28, 2024, comprising 5.6% of total assets.
Total current assets were $29.8 billion as of January 28, 2024, making up 38.9% of total assets.
Liquidity and solvency analysis
Total current liabilities were $22 billion at January 28, 2024.
The current ratio was 1.35 times for fiscal year 2023.
Total liabilities were $75.5 billion as of January 28, 2024.
The debt ratio was 98.7% for fiscal year 2023.
We could see that the debt ratio was very high, and the amount of stockholders’ equity was very minimal.
Profitability analysis
The Home Depot’s net sales were $152.7 billion, $157.4 billion and $151.2 billion in fiscal 2023, fiscal 2022 and fiscal 2021, respectively.
The net sales in fiscal 2023 were down up 3% year-on-year.
The net sales in fiscal 2022 were up 4.1% year-on-year.
The net sales has been nearly flat in past three years.
Gross profit was $51 billion, $52.8 billion and $50.8 billion in 2023, 2022 and 2021, respectively.
Gross margin was 33.4%, 33.5% and 33.6% for 2023, 2022 and 2021, respectively.
Operating income was $21.7 billion, $24 billion and $23 billion in 2023, 2022 and 2021, respectively.
Operating profit margin was 14.2%, 15.2% and 15.2% in 2023, 2022, and 2021, respectively.
Net earnings were $15.1 billion, $17.1 billion and $16.4 billion in 2023, 2022 and 2021, respectively.
The net profit margin was 9.9%, 10.9% and 10.8% in 2023, 2022 and 2021, respectively.
We think that the company’s profitability is very stable.
Cash flow analysis
Net cash provided by operating activities was $21.2 billion, $14.6 billion and $16.6 billion in 2023, 2022 and 2021, respectively.
The amount of cash flow is acceptable relative to the amount of net earnings.
Capital expenditures were $3.2 billion, $3.1 billion and $2.57 billion in 2023, 2022 and 2021, respectively.
Free cash flow was $18 billion, $11.5 billion and $14 billion in 2023, 2022 and 2021, respectively.
Repurchases of common stock were $8 billion, $6.7 billion and $14.8 billion in 2023, 2022 and 2021, respectively.
Cash dividends were $8.4 billion, $7.8 billion and $7 billion in 2023, 2022 and 2021, respectively.
Cash returned to shareholders has averaged about $17.6 billion per year in the past three year.(including repurchases of common stock and cash dividends)
Conclusion
The Home Depot has took shareholders’ return very seriously.
The amount of repurchasing stock and cash dividends reduced shareholders’ equity.
The profitability is very stable, though the net profit margin is about 10%.
We think that The Home Depot has a large business scale, so The Home Depot’s product cost is lower relative to its competitors.
The company is a good one, which provided shareholders with rich returns.
We maintain that the range of company’s reasonable valuation is $200 billion to $250 billion.
Disclaimer: The content is for reference only and does not constitute investment advice.
Introduction
The Home Depot, Inc. is the world’s largest home improvement retailer based on net sales for fiscal 2023. We offer our customers a wide assortment of building materials, home improvement products, lawn and garden products, décor products, and facilities maintenance, repair and operations products. We also provide a number of services, including home improvement installation services and tool and equipment rental. As of the end of fiscal 2023, we operated 2,335 stores located throughout the U.S. (including the Commonwealth of Puerto Rico and the territories of the U.S. Virgin Islands and Guam), Canada, and Mexico. The Home Depot stores average approximately 104,000 square feet of enclosed space, with approximately 24,000 additional square feet of outside garden area. We also maintain a network of distribution and fulfillment centers, as well as a number of e-commerce websites in the U.S., Canada and Mexico.
The Home Depot, Inc. is a Delaware corporation that was incorporated in 1978. Our Store Support Center (corporate headquarters) is located at 2455 Paces Ferry Road, Atlanta, Georgia 30339. Our telephone number at that address is (770) 433-8211.
