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By Investor Empires On Feb 27, 2025

Home Depot (NYSE: HD) He is a retail seller who does not need an introduction. The company owns more than 2,300 stores across North America-which makes it a store known for the tasks to do yourself, professional contractors, and a service sector that can help customers in their home improvement projects.

Home Depot expansion corresponds to a strong arrow performance. The market value jumped from about 50 billion dollars 15 years ago to more than 380 billion dollars today. As a leader in the industry and is composed of each of S & P 500 (Snpindex: ^Gspc) and Dow Jon's industrial average (Djindices: ^DJI)Home Depot revolves around a blue chip as it happens.

Here is the reason for Home Depot essential Arrows profits Investors in passive income can build their wallet around 2025 and beyond.

Photo source: Getty Images.

The updated Home Depot directives from November (when I reported the results of the third quarter of 2024) calling for a 2.5 % comparaable stores for the full fiscal year and the arrow's mitigating profits (EPS) by 1 % when modified for the fiscal year for a period of 53 weeks. In general, weak results. Especially when Al -Awla in relatively easy companies.

In 2023, similar Home Depot sales decreased by 3.5 %, while the profitability of the diluted arrow decreased by 9.5 %. Suffice it to say, that Home Depot is undoubtedly a multi -year contraction, which is clear when looking at the growth of stagnant sales and a decrease in operating margins in recent years.

HD (TTM) Revenue Plan — HD (TTM) revenues Data by Ycharts

Despite the bad results, the Home Depot shares have not seen significant decreases. About 11 % has increased over the past three years and 57 % over the past five years. However, it suffers from twice the performance of the S&P 500.

Looking at the growth of similar negative sales, the stock was flexible, probably because the market is more interested in the place where the company is going more than its place today. The long -term investment thesis of Home Depot has not changed. It is just the background of the current macroeconomic economy is the main opposite wind of the home warehouse.

High interest rates make them more expensive to finance home improvement projects. High real estate interest rates bend home purchases, which may lead to a decrease in home sales. The issue price index, which measures residential real estate prices in the United States, is at the highest level in 10 years. Mortgage interest rates are close to the highest level in 10 years. US credit card debt is $ 1.2 trillion-an increase of approximately 50 % over prenatal levels.

American credit card debt scheme — American credit card debts Data by Ycharts

Meanwhile, current homes in the United States are approaching the lowest level in 10 years and a decrease in about 20 % of the prenatal levels-which indicates the sale of fewer homes. The ability to afford fixed housing costs in the United States About 100This means that the average medium family income with a 20 % batch can carry a house. Basically, buyers who look forward to getting a first batch or those who have a fairly lower income are priced outside the market.

Current home sales plan in the United States — House sales in the United States Data by Ycharts

In an ideal world, Home Depot prefers to have a home and be able to withstand home improvement projects. Therefore, the tense housing market explains how difficult the current operating environment is. But there are always two sides of the coin.

The empty look at the half of the glass on the home warehouse is that the macro background is bad and no signs of improvement appear. Therefore, growth can remain in the short term in the foreseeable future.

Half glass-filled glass perspective is that the results of the Home Depot barely decrease despite many challenges-a testimony of the strength of its brand.

In other words, 2023 and 2024 was a stress test on Home Depot, and the company has gone through flying colors.

When it comes to raising big profits over the past fifteen years, a few companies can compete with Home Depot. The company raised its quarterly profits from $ 0.25 per share in 2011 to $ 2.25 per share in 2024 – with consistent increase every year during that period.

Investors were able to rely on an increase like an hour. Since 2013, Home Depot has announced an increase in profit distributions in February or March (at the same time about financial profits for the entire year). Therefore, investors can anticipate another increase from Home Depot when profits are reported on February 25.

Increased, tight and 2.3 % profit revenue, increasing a strong option for negative income investors.

In addition to its strong profits, Home Depot has a reasonable evaluation. The ratio of the price to the profits (P/E) is 26.2 and P/E to the front 24.5 compared to 22.9 P/E over the past ten years. Although Home Depot looks a little exaggerated at first glance, it is important to realize that the home improvement industry is currently slowing. Therefore, the price of the Home Depot shares exceeds its profit growth in recent years.

Home Depot can be a spring wrapped in economic growth. The company completed its acquisition of SRS distribution of $ 18.25 billion in June 2024. Depot Home granted additional exposure to the contractor market, helping to diversify the total business. The full capabilities of the acquisition were not achieved due to the slowdown in the industry.

The ability to make a hostile step for this size is a testimony on the strength of the public budget for the home warehouse, the management focus on the long -term strategy instead of short -term results, and the willingness of Home Depot to perform a large acquisition, even if it takes some time.

Tell us all, Home Depot looks a little exorbitant now. But the stock can start to look very cheap during the next expansion period, especially given the added support from SRS.

Companies working in periodic industries tend to see EBBS and large flows in their sales and profits. But the home warehouse is not. Reducing, the company's performance is similar to fixed climbing above and then a flat line instead of a large shrinkage.

Through the year 2025, the first full year was identified after the SRS merged, we can see a slight increase in sales and profits, even if interest rates remain high.

Home Depot is an excellent arrow for purchase if you have a long -term time horizon. The growing profit distributions provides a worthy incentive to make stocks by slowing down. The evaluation is reasonable given the factors discussed. However, expect the results of the Home Depot in the short term under pressure until the overall climate improves.

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