This analysis attributes an Overall Score to a company by analyzing several aspects that I consider to be among the most important.
In summary, a company to have an overall score close to 100% must have the following characteristics:
- Report high growth rates in the last 3 years (and in the last quarter) in terms of Revenue, Gross Profit, Operating Income and Net Income. Furthermore, it must operate with high and improving margins in recent years.
- Analysts expect Earnings Per Share (EPS) and revenues to grow in the short term (in the next quarter) and in the medium to long term (in the next 5 years). Moreover, they expect the company to be undervalued at current prices and in the last quarter their EPS expectations must have been beaten with a consequent rise in share prices.
- The stock price of the company must have outperformed the S&P 500 index and in the last 3 months the Hedge Funds and Insiders bought shares in the company.
The overall score ranges from -100% (if the characteristics listed above are all very negative) to +100% and it is unlikely that there will be a company with a +100% score because the requirements for achieving this score are very high, however a score higher than +40% can be considered good.
This analysis alone is not enough to decide whether or not to invest in a company because it does not provide indications on the timing of entry, but it is a good starting point.
The Home Depot Inc (HD)
- Overall Score: +25,9%
- Operating and Net income slightly down in the last quarter, -0.1% and -0.8% respectively. Revenue + 1.2%
- In the last 3 years, revenues have increased by 24.3%, while profits have increased by 58.6% with the net margin improved by +27.6%
- Analysts expect annual EPS growth of + 8.5% over the next 5 years and consider the company undervalued by 12.56%
- HD has clearly outperformed the S&P 500 index since the beginning of the year (+ 37% vs. + 19%)
The Home Depot Inc. is the largest home improvement retailer in the United States, supplying tools, construction products, and services.
The overall score of HD is 26% .
In the last 6 months, HD has overperformed the S&P500 index by 12,6% and analysts believe the company is overvalued by -1,0% .
In the last quarter, the company reported revenues of 30839 million, up by 1,2% compared to the same quarter 12 months earlier. Revenue TTM (Trailing-12-Months) are equal to 110013 million, up by 24,3% in the last 3 years.
HD reported an operating income of 4896 million in the last quarter, worsening by -0,1% compared to the same quarter 12 months earlier, also reporting a reduction by -1,3% in the operating margin. Considering the sum of the last four quarters (TTM), HD reports an operating income of 15741,0 Million , a growth of 33,7% compared to three years ago and an improvement of 7,6% in the operating margin.
HD reported a net income of 3479 million in the last quarter, worsening by -0,8% compared to the same quarter 12 months earlier, also reporting a reduction by -2,0% in the net margin. The TTM net income is 11118 million , a growth of 58,6% compared to three years ago and the net margin has improved by 27,6% .
In the next quarter, analysts expect growth in EPS (Earnings Per Share) of 0,4% and a growth in revenue of 4,6% . Furthermore, they expect an annual growth of HD EPS by 8,5% for the next 5 years.
In the last quarter, HD reported better EPS than analysts’ expectations and the stock price reacted by increasing by 4,4% .
Finally, in the last 3 months the Hedge Funds have increased their positions by 265.5k shares. The Insiders have sold shares worth $46.61M .
Sources & additional info
*The comparison with the S&P 500 index is visible inside the graph.
*Data updated to the last quarterly report available
*Data in Millions of Dollars
*Data from zacks.com, tipranks.com, reuters.com, finance.yahoo.com
*Company information from wikipedia.com
This analysis gives you a general idea of whether a company is good or not, but you may also be interested in finding potential entry points, so I am waiting for you here to know about the best chart patterns of today.
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DISCLAIMER: The information in this blog post represents my own analysis/opinions and does not contain a recommendation for any particular security or investment.