Home Depot Case Analysis

ACCT 461 FALL, 2021

HOME DEPOT:

1. Read both Home Depot (Home Depot, Inc. and Home Depot in the New Millennium) cases and compare Home Depot’s recent competitive strategy with that of the company’s early years, indicating how it has evolved.
2. Compare the stock price history for the last 5 years of Home Depot(but only through the year ended date of 1/31/21) with that of its chief rival today, Lowe’s, and comment. Do the same comparison for the current year to date (through approx. 11-30-21) and comment whether the trend has continued.
3. Compare income statements for the most recent year (2020) on a common-size basis and comment on areas which are different between the two companies.
4. Show a side by side comparison of growth rates in sales and earnings for both chains for the most recent 5-year period. Comment on how they differ. Have any of the trends changed over the last 5 years? Explain and illustrate.
5. Which chain do you think is most PRODUCTIVE, given the square footage information? Refer to Exhibit 2 (page 8-32 of the “New Millenium” case) for the type of information you might want to look at for the most recent years to evaluate productivity per square foot. Explain and support your answer.
6. Summarize the dividend policies as well as the stock buyback plans of both chains and show clearly how much is spent on each. Show which chain has returned more cash to stockholders in the last 3 years and state the amounts.
7. Summarize HOME DEPOT’S cash flows and then make a very general yet concise statement concerning where the company gets its cash and what the company does with its cash. Use the most recent 3 year period to answer this question.
8. If you were only able to buy the stock of one of these 2 companies, which would it be? Give reasons (using some financial data) to support your answer and comment on your recommendation versus those of analysts who follow these stocks.