HD – Market expectations are for Uniform ROA to reach new peaks, but management may have concerns about demand trends, distribution centers, and profitability

• Home Depot (HD) currently trades above corporate and historical averages relative to Uniform earnings, with a 26.2x Uniform P/E (Fwd. V/E’).
• At these levels, markets are pricing in expectations for Uniform ROA to reach new peaks, accompanied by 3% Uniform asset growth.
• Meanwhile, analysts expect Uniform ROA to remain at 30%-31% levelsthrough 2023, accompanied by 2% Uniform asset growth.
• If sustained going forward, these levels would imply a stock price closer to $298, representing approximately 26% equity downside for the firm.
• Moreover, the firm’s most recent earnings call suggests management may have concerns about demand trends, distribution centers, and profitability.