HD - Quick Take - 1Q in-line across the board; Our Truist Card Data improved through the qtr; full-year guide reiterated

研报英文原文证据摘录

HD - Quick Take - 1Q in-line across the board; Our Truist Card Data improved through the qtr; full-year guide reiterated

Truist Securities

Valuation and Risks

Valuation:

We use our Ciccarelli's Valuation Model (CVM) as the basis for all of our valuation work, whenever possible. At its core, we think of our

CVM as a relative valuation tool, both relative to its own history as well as vs. the market (S&P 500). Over the last 3 years, HD shares

have traded at a ~10% premium to the market (22.8x vs. 20.8x). Our target multiple of 26x our FTM EPS represents a ~15% premium.

This valuation analysis results in our $394 price target.

Our CVM is an interactive, relative valuation model, enabling investors to see how a stock has traded vs. the market (S&P 500) over the

last 3 years to better assess a target multiple. For example, if a stock has historically traded at 21x FTM EPS, while the market has traded

at 18x FTM estimates, then the stock would historically trade at an ~17% premium to the market. We then assess whether we believe the

stock should trade at a discount, in-line or at a premium to this historical rate based on our fundamental outlook for the company. We then

provide what we view as realistic upside/downside scenarios for key financial inputs to assess potential ranges for the stock.

Risks to Our Rating and Price Target:

Substantial/sustained interest rate increases – If the Fed were to raise interest rates too far or for too long, we think it would eventually

reduce home affordability and potentially slow housing turnover rates enough that home prices (and home improvement activity) may

decline.

Greater than expected shift of spending back to services/experiences and away from goods – Many people accelerated spending

efforts on their homes over the past 3 years.