The Home Depot, Inc. (HD)
Valuation Overview•Is The Home Depot, Inc. Overvalued or Undervalued?
Commands a premium valuation multiple over its peers, likely pricing in superior execution.
Moderate quality score of 51/100, reflecting stable operating margins and manageable leverage.
Analysts remain bullish, forecasting further upside expansion with consensus targets suggesting solid gains.
Verdict: Average quality business weighed down by significant solvency concerns.
Wall Street is broadly bullish, projecting solid upside with steady expected earnings growth. This is paired with healthy capital returns, anchored by a strong, well-covered dividend yield.
HD demonstrates strong business quality with robust profitability and healthy margins (highlighted by a massive 21.8% ROIC). This is paired with a moderately leveraged but stable balance sheet.
The company exhibits steady, low-single-digit revenue growth however, earnings have severely contracted over the same period. Operating efficiency remains adequate with margins around 12.4%.
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $41.8B | +3.2% | +1.5% | +4.5% | +6.4% | |
| EBITDA | $5.0B | — | -3.6% | — | — | |
| Net Income | $3.3B | -4.4% | -6.1% | — | +7.3% | |
| EPS (Diluted) | $3.30 | -4.6% | -5.2% | +3.6% | +10.1% | |
| Free Cash Flow | $5.2B | -22.5% | +3.2% | -5.0% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 33.1% | 33.4% | 33.5% | 33.8% |
| Operating Margin | 12.4% | 13.5% | 14.2% | 14.2% |
| Net Margin | 8.4% | 9.3% | 9.9% | 9.7% |
| FCF Margin | 8.6% | 9.9% | 9.2% | 9.7% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q2'26Latest | $3.41 | $3.43 | +0.6% | ||
| Q1'26 | $2.53 | $2.72 | +7.5% | ||
| Q4'25 | $3.83 | $3.74 | -2.3% | ||
| Q3'25 | $4.72 | $4.68 | -0.8% | ||
| Q2'25 | $3.60 | $3.56 | -1.1% | ||
| Q1'25 | $3.04 | $3.13 | +3.0% | ||
| Q4'24 | $3.64 | $3.67 | +0.8% | ||
| Q3'24 | $4.49 | $4.60 | +2.4% |
Total return is -1.0% (1Y), lagging the benchmark by -26.0%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | -2.0% | -11.3% | — |
| 1Y | -1.0% | -26.0% | +2.7% |
| 3YCAGR | +6.2% | -14.0% | +9.0% |
| 5YCAGR | +4.5% | -8.4% | +13.9% |
| 10YCAGR | +12.1% | -1.7% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about The Home Depot, Inc. (HD) valuation, health, and returns.
The Home Depot, Inc. is estimated to be fair under our discounted cash flow framework. relative multiples indicate the stock is Premium mostly justified compared to industry peers. trading near fair value (DCF: $353.22)
The Home Depot, Inc. has multiple valuation anchors: DCF Intrinsic Value: $353.22 | Peer Relative Fair Value: $286.11 | Wall Street Analyst Target: $373.92 (implying +11.9% upside). A convergence of these signals offers higher conviction.
The Home Depot, Inc. displays fair financial health with a composite quality score of 51/100, supported by a Altman Z-Score of 5.0 (safe zone), Piotroski F-Score of 4/9, Return on Invested Capital (ROIC) of 21.8%.
The Home Depot, Inc. pays a 2.7% dividend yield, covered by a 65% payout ratio with 16 years of growth, supplemented by a 0.0% buyback yield.
The Home Depot, Inc.'s current growth trajectory is Stable. The company achieved +3.2% 1Y revenue growth and -4.6% 1Y EPS growth, compared to its 3Y revenue CAGR of +1.5%.
Wall Street consensus is Buy based on 62 analysts, beating EPS expectations in 75% of recent quarters with a 2-quarter streak. The consensus price target represents a +11.9% change from current levels.
Investment risks for The Home Depot, Inc. include: -29.7% 1-year max drawdown. Volatility risk is characterized by a beta of 0.73x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.