Summary
Home Depot has proven us wrong time and time again. We've been behind the stock price with our valuation for as long as we can remember.
The company's outlook is bright, but we still believe the housing market is cyclical, and that the market may be ignoring the inevitable next downturn.
Home Depot continues to showcase its fundamental strength, with the latest reading a breakneck pace of same-store sales expansion.
We still think shares are overpriced.
By The Valuentum Team
For those that know us, you know that we like to look at stocks as though they are pieces of a business. As with the investing greats Benjamin Graham and Warren Buffett, we think each share of stock has something called intrinsic value. What we do each and every day is to strive to calculate what we think is an appropriate estimate of a company's intrinsic value because we want to have a reasonable basis to derive what an investor might be willing to pay for shares. We've had a lot success with intrinsic-value investing during the past several years, and we think it is helpful for readers to know that our primary efforts in equity analysis are dedicated to getting our estimates of a company's fair value range as "correct" as possible. Here's the basic construct of the enterprise discounted cash flow model that we use to value roughly 1,000 companies on a systematic basis.
