The Home Depot, Inc. (HD), W.W. Grainger, Inc. (GWW): Are HD Supply Holdings Inc (HDS) Shares on Sale?

A bit pricey
With a 30% run-up since its IPO in the beginning of the summer, investors were clearly expecting more out of HD Supply Holdings Inc (NASDAQ:HDS)’s first reported quarter. The company has a strong hold on its various markets, and should be able to deliver solid growth regardless of market conditions. Sales reflected a more average performer, and the rich valuation took a hit.

Now, at about 11.75 times forward earnings, HD Supply Holdings Inc (NASDAQ:HDS) isn’t as pricey and represents a steep multiple discount compared to one of its peers, W.W. Grainger, Inc. (NYSE:GWW), which trades at 19.7 times earnings.

As residential and non-residential construction spending ticks back up, and the company continues its growth plan of both organic and acquisition-driven market share gains, HD Supply Holdings Inc (NASDAQ:HDS) may be an appealing long-term pick. As with any construction-tied business, the stock will go in flux with macroeconomic shifts — far from an insulated business. However, for the time being, there is not much reason to suggest that HD Supply won’t find ways to grow its business and, hopefully, its stock price.

The article Are HD Supply Shares on Sale? originally appeared on Fool.com and is written by Michael Lewis.

Fool contributor Michael Lewis has no position in any stocks mentioned. The Motley Fool recommends Home Depot. 

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