Home Depot Financial Analysis Essay
Home Depot Inc: Senior Management Report
Data was collected from CRSP daily observations for Home Depot starting January 1993 and ending December 2004. Observations for S&P and Home Depot were matched, and also for the T-Bill composite which is used as a substitute for the risk free rate. No unusual data patterns were observed during the work-up. After having done the Event Check, no large differences in the slopes of the data in the periods before and after 911 were discovered and both periods are used. The data matches the usual modeling assumptions and thus, results are to be expected to be interpreted without contradictions.
HD' Market Rating Analysis (MRA):
Jensen's Alpha ( ) was largely in the positive range. Therefore, Home Depot return was greater than the S&P return and HD …show more content…
On the other side, the TPI of the market was lower than Home Depots' Treynor ratio and thus, the company gives higher return relative to non-diversifiable risk (See Appendix, p. 1).
The BH-L Relative Unique Risk (RUR) was 47,8% which offers a moderate return for investors for risk taking (See Appendix, p. …show more content…
This rating is based upon PTR main measurements a high appreciation score (89) which represents the potential price change to target, and a good power rating (74) which states the likelihood of a favorable performance. Home Depot Inc. has a high historical profitability, high forecast profitability, a good price/ asset ratio and a high financial strength. According to PTR, HD is expected to continue to create value for investors since returns exceed capital costs. PTR values Home Depot Inc. as highest investment quality and is likely to achieve a good performance in the
Data was collected from CRSP daily observations for Home Depot starting January 1993 and ending December 2004. Observations for S&P and Home Depot were matched, and also for the T-Bill composite which is used as a substitute for the risk free rate. No unusual data patterns were observed during the work-up. After having done the Event Check, no large differences in the slopes of the data in the periods before and after 911 were discovered and both periods are used. The data matches the usual modeling assumptions and thus, results are to be expected to be interpreted without contradictions.
HD' Market Rating Analysis (MRA):
Jensen's Alpha ( ) was largely in the positive range. Therefore, Home Depot return was greater than the S&P return and HD …show more content…
On the other side, the TPI of the market was lower than Home Depots' Treynor ratio and thus, the company gives higher return relative to non-diversifiable risk (See Appendix, p. 1).
The BH-L Relative Unique Risk (RUR) was 47,8% which offers a moderate return for investors for risk taking (See Appendix, p. …show more content…
This rating is based upon PTR main measurements a high appreciation score (89) which represents the potential price change to target, and a good power rating (74) which states the likelihood of a favorable performance. Home Depot Inc. has a high historical profitability, high forecast profitability, a good price/ asset ratio and a high financial strength. According to PTR, HD is expected to continue to create value for investors since returns exceed capital costs. PTR values Home Depot Inc. as highest investment quality and is likely to achieve a good performance in the