Home Depot (The)

Methodology

Home Depot's home improvement retail business generates relatively stable earnings with moderate cyclicality from housing turnover and remodeling activity. The company's market leadership and Pro customer relationships provide competitive advantages. This calculation works well given the essential nature of home maintenance spending, though housing market cycles and discretionary big-ticket project spending create some earnings sensitivity to economic conditions.

Methodology

Home Depot typically commands premium PEG ratios reflecting its dominant market position, operational excellence, and consistent execution through cycles. The company's scale advantages and interconnected supply chain justify higher multiples than typical retailers. Compare to other large-format retailers to assess whether Home Depot's category leadership and Pro customer moat warrant its valuation premium.

Methodology

Home Depot pays a meaningful dividend with consistent growth reflecting strong cash generation from home improvement retail. The company balances dividends with substantial share buybacks as primary capital return mechanisms. PEGY provides additional context for this retail compounder, though the primary appeal remains consistent earnings growth from market share gains and housing stock aging rather than exceptional yield.