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HD – Market expectations are for historically high Uniform ROA, but management has concerns about investments, ROIC, and sales comps

March 19, 2018

      • The Home Depot Inc. (HD:USA)currently trades near historical highs relative to UAFRS-based (Uniform) Earnings, with a 23.4x Uniform P/E, implying bullish expectations for the firm. However, management has concerns about investments, ROIC, and sales comps
      • Specifically, management may be downplaying concerns about their lack of incremental investment post-tax reform, and may have concerns about the sustainability of ROIC improvements. Additionally, they may be downplaying concerns about their planned investments, and may lack confidence in the sustainability of double-digit comps in their Lumber, Electrical, and Tools department

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