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Home Depot Z Score vs. Operating Margin

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The Drivers Module shows relationships between Home Depot's most relevant fundamental drivers and provides multiple suggestions of what could possibly affect the performance of Home Depot over time as well as its relative position and ranking within its peers. Please check Risk vs Return Analysis

Home Depot Operating Margin vs. Z Score Fundamental Analysis

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Home Depot is rated below average in z score category among related companies. It is rated below average in operating margin category among related companies reporting about  2.66  of Operating Margin per Z Score.
Z-Score is a simple linear, multi-factor model that measures the financial health and economic stability of a company. The score is used to predict the probability of a firm going into bankruptcy within next 24 months or two fiscal years from the day stated on the accounting statements used to calculate it. The model uses five fundamental business ratios that are weighted according to algorithm of Professor Edward Altman who developed it in the late 1960s at New York University..
Home Depot 
Z Score 
 = 
Sum Of  
 
5 Factors 
=
6.2
To calculate Z-Score one would need to know current working capital of the company, its total assets, and liabilities, amount of latest retained earnings as well as earnings before interest and tax. Z-Score can be used to compare the odds of bankruptcy of companies in a similar line of business or firms operating in the same industry. Companies with Z-Scores above 3.1 are generally considered to be stable and healthy with a low probability of bankruptcy. Scores that fall between 1.8 and 3.1 lie in a so-called 'grey area' with scores of less than 1 indicating the high probability of distress. Z Score is used widely by financial auditors, accountants, money managers, loan processers, wealth advisers, as well as day traders. In the last 25 years, many financial models that utilize z score has been proved to be successful as a predictor of corporate bankruptcy.
Operating Margin shows how much operating income a company makes on each dollar of sales. It is one of the profitability indicators which helps analysts to understand whether the firm is successful or not making money from everyday operations.
Home Depot 
Operating Margin 
 = 
Operating Income 
Revenue 
X
100 
=
16.51 
A good Operating Margin is required for a company to be able to pay for its fixed costs or payout its debt, which implies that the higher the margin, the better. This ratio is most effective in evaluating the earning potential of a company over time when comparing it against a firm's competitors.

Home Operating Margin Comparison

  Operating Margin 
    
  Home Depot Comparables 
Home Depot is rated below average in operating margin category among related companies.

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