Home Depot Stock Forecast

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Home Depot Stock Forecast

Will Home Depot (Hd) Stock Make A Comeback?

There's no denying that Home Depot (HD) is struggling, and it is also showing in the stock price. But a quick look at history shows that Home Depot (HD) has been around for a while and has made a lot of money for its shareholders.

Right now, Home Depot (HD) has the largest chain of stores in the home improvement niche. As per the latest data, they have 2300+ stores in the US, Mexico, and Canada.

Home Depot Struggles With Higher Interest Rates

The best thing about Home Depot (HD) is that it operates in a space that just grows organically. Just think about it: People will always need to improve their homes and buildings.

Also, Home Depot (HD) continues to acquire other companies in the space, which has helped it to further grow its footprint and hold on to this space.

But why is Home Depot (HD) stock struggling as of late? It all started with the first rate hike, as higher rates normally suppress the real estate market.

Now that the interest rate in the US and the rest of the world is coming down, the real estate market is also likely to boom. That's a good thing for Home Depot (HD) as more people will be willing to buy the products from the stores.

But even now, consumers are not making big purchases as the inflation levels are still high. So, that's something that Home Depot (HD) can't do much about.

The data for Q3 showed that sales have increased by 2.8% y/y to $41.4 billion. But the EPS has declined from $3.78 to just $3.74, which was not a good sign at all. On top of that, the management has also lowered its forecast for comparable sales and operating margin.

But even now, the P/E ratio of Home Depot (HD) stock is 24, which is quite high for a company with declining earnings. However, we can't deny the fact that Home Depot (HD) stock is very resilient and has been around for a while!

With all things considered, the better option is to wait for the P/E ratio to become reasonable before buying the Home Depot (HD) stock. Once the rates come to normal levels, Home Depot (HD) stock is highly likely to bounce back.

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