Home Depot (NYSE:HD) has been experiencing a spending boom since the pandemic’s onset. Folks are spending a lot more time at home than ever before and investing in their properties to make that time more enjoyable and productive. 

It may not be so surprising that folks were spending more money on their homes at the beginning of the pandemic, but what is surprising is the durability of that spending boom. The house has turned into an office, a classroom, a gym, and an entertainment center.

In a related story, Home Depot is showing no signs of slowing down. The home improvement retailer announced it would be hiring an additional 100,000 employees ahead of its busy spring season.

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Home Depot is anticipating the shopping spree to continue 

Let’s try and put the pandemic shopping surge at Home Depot into context. In the last decade, Home Depot has grown revenue at a compounded annual rate of 6.9%. Since the pandemic onset, starting with its quarter ending June 2020, Home Depot’s revenue grew by at least 20% for four consecutive quarters, culminating with a 32.7% rate in the quarter ended in April 2021.

Some investors and shareholders worried that Home Depot’s revenue would snap back as economies reopened. That fear has not materialized. Home Depot is growing revenue above its long-run rate, on top of the tremendous gains it made in the four quarters ending April 2021. To make this feat look even more impressive, it’s happening at a time when businesses worldwide are reporting difficulty securing enough inventory to sell. Meanwhile, Home Depot managed to sell $37 billion worth of goods in its quarter ended in October, 33% higher than the same quarter in 2019.

Management is confident this surge in demand will last for at least the next few quarters and is planning accordingly. Note that Home Depot has 500,000 associates, so the additional 100,000 associates it’s planning to hire for the upcoming spring season will add the equivalent of 20% of its existing workforce, a meaningful increase, to be sure. Home Depot is hiring for flexible, full-time or part-time positions, including customer service, sales, store support, freight, merchandising, and warehouse associates.

The move is not without risk. If customer demand turns out to be a lot lower than anticipated, Home Depot’s profits could take a hit from the more extensive expense base. And if the company needs to lay off employees it only recently hired, it could lower morale among existing associates and reverse the positive momentum Home Depot has built since the pandemic onset. Given the consequences of getting it wrong, it seems like management is pretty confident in continued robust customer demand. 

What this could mean for Home Depot investors

The stock is down 12% year to date as the market anticipates a slowdown of remarkable growth. Despite the drawback, Home Depot is trading at a price-to-earnings ratio and free cash flow of 24.39 and 32.13, respectively. Those prices are near the higher end of the range it has sold for in the last decade, so Home Depot’s stock is not relatively cheap.

That said, it isn’t easy to bet against a company that keeps performing well. However, it does mean that it will be harder for Home Depot to push the stock higher without subsequently improving earnings and cash flow. The good news is that it has proven adept in this task, growing earnings per share at a compound annual rate of 19.5% over the last 10 years.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.