Wells Fargo reports back on virtual investor meetings held with Home Depot (NYSE:HD) CFO Richard McPhail and other execs.
The firm says the talks reinforced its view that recent tailwinds appear sustainable, 1H margin headwinds can improve, and outsized share gains can continue via enhanced Pro offerings, category initiatives and expanding supply chain capabilities.
“With sustainability questions and tough FY21 compares entering the narrative, we continue to view the home improvement category among the highest quality in retail, and with HD shares – 10% off recent highs (-7% SPX), we see an attractive entry point. In our view, recent share gains can accelerate (vs. fragmented, underinvested competition), macro/housing remains robust (turnover, rates, etc.), and de-urbanization and wallet share shifts remain incremental.”
For investors, the math still works out for snapping up shares, per the WF analyst team.
“At 22x, we see an entry point. HD’s NTM P/E shed 2.5x turns