Home Depot business overview and operations

Home Depot

Industry overview about home depot and its position in the Market in comparison to its closest competitor Lowe's

Home Depot Inc. became a corporation in 1978 and currently has over 1500 stores. The stores are full service warehouse style, stores that sell more than 40,000 products related to home improvement. (HD Full Description)

Multex Investor also reports that, Home Depot operates four wholly owned subsidiaries: Georgia Lighting, Inc., Apex Supply Company, Inc., Your other Warehouse, Inc. And HD Builder Solutions Group, Inc." (HD Full Description) Home Depot is the leading company in the Home improvement industry with a market capitalization of 83.97 Billion and a P/E ratio of 21.41.

Lowe's is Home Depot's nearest competitor in the home improvement industry. Lowe's became a corporation in 1952 and specializes in home decor and home improvement products. (LOW Full Description) The company has over 900 stores throughout the country. The company is the second leading retailer of home improvement supplies with a market capitalization of 45.50 Billion and a P/E ratio of 27.52.

According to the Home depot balance sheet, Income statement (fax), do a financial analysis of how strong the company is doing in comparison to Lowe's.

The 2003 annual balance sheet (in millions) for home depot reports that the company had assets totaling 30,001,000 and total liabilities amounting to 8,035,000. Home Depot's income statement (in millions) reports a gross profit of 19,011,000 and EPS is 1.57. According to Home Depot's Annual Report,

Gross profit as a percent of sales was 31.1% for fiscal 2002 compared to 30.2% for fiscal 2001. The rate increase was attributable to a reduction in the cost of merchandise sold which resulted from centralized purchasing, as we continued rationalizing vendor and sku assortments. Enhanced inventory control, resulting in lower shrink levels, and an increase in direct import penetration to 8% in fiscal 2002 from 6% in fiscal 2001 also positively impacted the gross profit rate." (Summary of Home Depot Inc.)

In comparison, Lowe's balance sheet (in millions) reports total assets of 18,109,000 and total liabilities, which amount to 15,000. Lowe's Income statement reports gross profits totaling 8,026,000 and EPS is 1.89. As you can see Home Depot's gross profits are more than double that of Lowe's. In addition, the overall operations and financial condition of Home Depot is better than that of Lowe's. Lowe's has a higher EPS and Stock Price than Home Depot and analysts report that there is a higher risk associated with purchasing Lowe's stock.

According to the daily closing price of Home Depot within the last month, discuss and explain how the stock price movement of Home Depot relate to the stock market index, and discuss how the current economic issues is effecting Home Depot and its stocks price movements.