Guru Joel Greenblatt (Trades, Portfolio) more than doubled his stake in The Home Depot (HD, Financial) during the third quarter, adding 345,905 shares of the company at an average price of $133.26 per share.
The trade had a 0.58% impact on Greenblatt's portfolio. He owns 590,129 shares of the company.
The Home Depot has a market cap of $167.25 billion, an enterprise value of $186.54 billion, a price-earnings (P/E) ratio of 22.22 and a price-book (P/B) ratio of 29.80.
The Home Depot is the largest home improvement retailer based on net sales of $88.5 billion for the fiscal 2015 year ended Jan. 31, 2016. The company sells an assortment of building materials, home improvement and lawn and garden products. Its corporate office is located in Atlanta.
According to GuruFocus The Home Depot has a 6 of 10 financial strength rating with a cash-debt ratio of 0.16, an equity-asset ratio of 0.13, an interest coverage ratio of 13.48 and a Piotroski F-Score of 7 indicating that the company is in a very healthy situation.
The company also has a profitability and growth rating of 8 of 10 with an operating margin of 13.98%, a net-margin of 8.23%, an ROE of 118.04%, an ROC (Joel Greenblatt (Trades, Portfolio)) of 55.32%, and EPS growth (three years) of 22.10%.
Greenblatt likely decided to more than double his stake because the company has established itself as the No. 1 home improvement retailer, it has reported strong financial statements, and it has nearly 40 years of operating experience.
Over the previous five years, The Home Depot has increased its revenue growth by 11.10%, its EBITDA has grown by 19.40%, the company’s operating income growth has increased by 21.50%, its EPS without NRI has grown by 22.70%, and its free cash flow growth has grown by an estimated 20.90% over the previous five years.
Below is a Peter Lynch chart that shows The Home Depot is trading above its intrinsic value.
Disclosure:Â Author does not own any shares of this company.
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