In partnership with Glassdoor, our investment analysts are taking a closer look at some of the most popular companies in Glassdoor's career community.
You might have heard that Americans love their homes. As it turned out, we were so optimistic about everyone's love of their homes that the financial world came to a standstill when things turned ugly. That didn't stop us, though, and now we're back on the homebuying track. That's great news for Home Depot (HD 0.86%) as we're working on new homes, fixing up the old ones, and filling out all our extra space.
In addition to helping Americans make their house a home, the home-improvement retailer also treats its employees well and spends time and money to help its communities. That all adds up to good news for investors, and Home Depot's stock has easily outpaced the return of the S&P 500 over the last five years.
Loving the job of helping homeowners
On Glassdoor, Home Depot employees have rated the company 3.3 stars out of five, and 83% approve of the job that CEO Frank Blake is doing. The company's extensive benefits for part-time and full-time employees certainly help keep spirits up. Employees can get vision, dental, stock purchase options, and tuition assistance.
Home Depot employs over 300,000 people in its 2,266 stores; in the first half of 2014, 97% of those locations met the requirements for the company's profit-sharing plan. Clearly, Home Depot has created an environment that gives its associates reason to excel.
Home Depot in the community
In addition to supporting its employees in ways that go beyond paychecks, Home Depot is giving back to the communities that make it successful. The Home Depot Foundation puts associates into volunteering rolls, where they support the construction and repair of housing for needy families. It also has a focus on returned veterans, pledging $80 million for housing support and veteran housing non-profits.
The business is cutting back on its environmental impact -- switching to energy-efficient lighting systems, using reclaimed rainwater, and completing thousands of audits to make sure suppliers are in compliance with the company's sustainability strategy.
In reviews of the company, employees often note the value of its community engagement, even if they didn't love their jobs. Home Depot is leading the way in community involvement and is having a clear impact on the areas where it operates.
Supporting investors
Beyond making its employees and communities happier, Home Depot has been making investors smile -- with one new exception that we'll get to. Sales in this year's second quarter were up 5.8%, as Americans turn to the company to refurbish their homes. Existing home sales are still on the rise, up 2.4% in June, according to the newest National Association of Realtors data.
Sales of existing homes generate two kinds of improvements that drive customers to Home Depot. First, sellers fix up their homes, often addressing neglected areas to make the structure as attractive as possible to prospective buyers. Whether through a contractor or by using their own hands, homeowners are putting cash into Home Depot.
Once those homes sell, the new owners are making them their own with fresh coats of paint, new fixtures, and updated landscaping. Those buyers are also heading to the Home Depot, driving sales up further. Even with its recent success, Home Depot is looking for more, as sales, prices, and household formation -- new homeowners moving into the market -- all slowly grow.
The elephant in the newly painted room
That would be Home Depot's payment systems data breach this year. It's bad news for everyone along the chain. Employees and communities are going to have less to work with, as the company must invest in technology in the near future. In addition, shareholders are likely to be hit with reduced earnings, softer sales, and potential litigation, depending on how the debacle shakes out.
Home Depot's stock jumped after its last earnings release, but shares subsequently fell back 5% with the revelation of that huge data theft. Home Depot has taken many of the same steps that Target did after its own 2013 data breach, including offering identity theft protection to customers and making sure shoppers aren't held liable for any future fraud.
The takeaway
While Home Depot is on the hook for all kinds of trouble, the business has a history of meeting the needs of its stakeholders. Employees, community members, and investors have all profited from Home Depot's success and business model.
The data breach wasn't due to a fundamental flaw in the business, and while it might harm the company in the short term, it is unlikely to be bad news for its long-term health. The Home Depot is one of America's strongest retailers and best-respected brands, and stakeholders at all levels should be happy to stay in this beneficial relationship.
