Can Home Depot Survive a Market Downturn?
It's anyone's guess as to when that downturn will happen, but there's no question of a slump eventually hitting the industry again. With home sales, employment, and residential construction plummeting, spending on home improvement collapsed from a $900 billion annual pace in early 2006 to just $370 billion by late 2010. Net earnings for the most recent 12-month period hit a record 8.6% of sales, which gives investors just a hint of the incredible recovery that Home Depot has enjoyed since the business bottomed out in 2008. Investors may or may not witness another downturn before that record is broken. But even a sharp slump on par with the crisis that hit the industry in 2008 wouldn't seriously challenge Home Depot's long-term operating health.