HD
HOME DEPOT, INC.NYSEValuation snapshot
Above bull casePrice is above even the bull case.
Price captured with valuation · Valuation Sep 5, 2026
What drives HD's base case?
base-case thesisSales have improved as acquisitions, new locations, and modestly positive results at established locations offset weak housing activity. Management still sees customers concentrating on smaller projects, but it expects the expanded professional-customer network to gain share. This case assumes a gradual housing normalization, modest profit recovery, and continued investment in stores, delivery, and distribution.
What shapes the assumptions
Total sales accelerated in the first half
quarterly sales growth of 0.048 in Q1 and 0.057 in Q2
Raises revenue growth
Underlying store demand remains modest
latest quarterly comparable-sales growth of 0.017
Lowers revenue growth
Current annual profit guidance is below the prior year
guided reported margin of 0.124 to 0.126 versus 0.127 in fiscal 2025
Lowers operating margin
Business investment remains elevated
planned capital expenditures equal to about 0.025 of sales
Raises reinvestment
Each driver links a business metric to the forecast assumption it shapes — the basis for this case, not investment advice.
Why the gap?
The market is pricing this as if revenue grows 12.0% a year. Over the last 5 years it grew 3.2% a year — so the price assumes far more than it has delivered.
What else could explain it?›
- Or, holding growth steady
- the price is also consistent with a 18.3% operating margin, against the 12.8% assumed here.
- How confident is this estimate?
- Robustness 64.0/10 (Moderate) — some of any gap is our own uncertainty rather than disagreement.
- What would change the answer?
- Which assumption this valuation swings on, and by how much.
Many combinations of assumptions reproduce the same price. These are ways to read what the market might be expecting, not the market's actual view. How this is worked out
Research & assumptions
Inspect the valuation thesis, cases, risks, evidence, and model inputs.
View details
Research & assumptions
Inspect the valuation thesis, cases, risks, evidence, and model inputs.
Three independently researched cases generated automatically from published financials. Every assumption is justified and cited; the discount rate is computed from researched market inputs.
Company value drivers
Ranked operating metrics and the valuation assumptions they influence.
1. Annual comparable-sales growth
This measures sales growth at established locations and websites, separating underlying customer demand from acquisitions and newly opened locations.
0.3%
reported2. Annual reported profit margin
This measures reported operating income per dollar of sales and captures pricing, merchandise mix, labor costs, and fixed-cost leverage.
12.7%
reported3. Annual return on invested capital
This measures after-tax operating profit relative to average debt and equity and indicates how efficiently retained cash can create additional operating profit.
25.7%
reported4. Annual capital spending as a share of sales
This measures the cash committed to stores, technology, fulfillment, and distribution relative to annual sales.
2.2%
derived5. Annual inventory turns
This measures how quickly merchandise inventory is sold and replaced, affecting working-capital needs and markdown risk.
4.4
reportedBase inputs from financials
source period →Base revenue (TTM)
$169.2B
Diluted shares
996,000,000
Net cash
-$9.2B
Bear
low confidence$165.53
IV / share
-48.4% vs $321.05
- Explicit cash flows
- $46.36
- Terminal value
- $128.41
- Net cash
- -$9.24
- Intrinsic value / share
- $165.53
77.6% of the value rests on the terminal value — high dependency. A small change to terminal growth moves the valuation a lot — see terminal growth below.
Revenue growth2.5% → 2.0% → 1.8% → 1.6% → 1.5%medium
How derived: Starting from 0.057 reported second-quarter growth but only 0.017 comparable growth, the forecast falls from the bottom of management's 0.025-to-0.045 fiscal-year range toward 0.015 as acquisition benefits fade and housing-related demand remains weak.
Why this confidence: Current-year management guidance ↑, Uncertain five-year housing cycle ↓
Measured by
- Annual comparable-sales growth0.3%reported
- Annual capital spending as a share of sales2.2%derived
Evidence for
- Management expects fiscal 2026 total sales growth of 0.025 to 0.045 but comparable sales of only 0.00 to 0.02, indicating that acquisitions and openings provide much of the near-term growth.[Home Depot Q2 FY2026 Results]· primary
Evidence against
- Second-quarter fiscal 2026 sales rose 0.057 and comparable sales rose 0.017, while management said demand was broad-based.[Home Depot Q2 FY2026 Results]· primary
Operating margin12.0%medium
How derived: Starting from the decline in annual margin from 0.142 in fiscal 2023 to 0.127 in fiscal 2025 and management's 0.124-to-0.126 fiscal 2026 guidance, this case assumes weaker demand and the lower-margin acquired mix prevent recovery and reduce the steady margin to 0.12.
Why this confidence: Three-year reported margin trend ↑, Future acquisition synergies and demand mix are uncertain ↓
Measured by
- Annual comparable-sales growth0.3%reported
- Annual reported profit margin12.7%reported
- Annual inventory turns4.4reported
Evidence for
- Annual reported margin declined from 0.142 in fiscal 2023 to 0.135 in fiscal 2024 and 0.127 in fiscal 2025; the company attributed some gross-margin pressure to the SRS and GMS mix.[Home Depot FY2025 Form 10-K]· primary
Evidence against
- Second-quarter fiscal 2026 reported margin was 0.143, and the adjusted figure was 0.147.[Home Depot Q2 FY2026 Earnings Transcript]· primary
Tax rate25.5%medium
How derived: Starting from effective rates of 0.24, 0.237, and 0.239 in fiscal 2023 through 2025 and a 0.243 fiscal 2026 target, this case adds a cushion for adverse state, foreign, or nondeductible-tax effects.
Why this confidence: Stable reported three-year tax history ↑, Long-term tax-law and geographic-mix uncertainty ↓
No tracked driver measures this assumption yet.
Evidence for
- The second-quarter fiscal 2026 effective tax rate increased to 0.245 from 0.242 in the prior-year quarter.[Home Depot Q2 FY2026 Earnings Transcript]· primary
Evidence against
- Home Depot's effective tax rate remained between 0.237 and 0.24 in each of fiscal 2023 through 2025, below this assumption.[Home Depot FY2025 Form 10-K]· primary
Reinvestment rate27.0%low
How derived: Starting from planned capital spending of roughly 0.025 of sales, falling inventory turns, and acquisition-related investment, this case retains 0.27 of after-tax operating profit because weaker productivity would require more cash to sustain modest growth.
Why this confidence: Reported capital spending and efficiency metrics ↑, Model reinvestment includes working capital and acquisition needs that vary sharply ↓
Measured by
- Annual return on invested capital25.7%reported
- Annual capital spending as a share of sales2.2%derived
- Annual inventory turns4.4reported
Evidence for
- Inventory turns fell from 4.7 in fiscal 2024 to 4.4 in fiscal 2025, and trailing return on invested capital fell from 0.313 to 0.257.[Home Depot FY2025 Form 10-K]· primary
Evidence against
- Home Depot still generated a 0.257 return on invested capital in fiscal 2025, indicating substantial capital productivity despite the decline.[Home Depot FY2025 Form 10-K]· primary
Terminal growth2.0%medium
How derived: Starting from the Federal Reserve's 0.02 longer-run inflation objective, this case assumes Home Depot merely keeps pace with inflation because weak transaction growth and mature-store economics offset population and housing growth.
Why this confidence: Federal Reserve long-run inflation anchor ↑, Terminal assumptions extend beyond observable business guidance ↓
Measured by
- Annual return on invested capital25.7%reported
Evidence for
- The Federal Reserve reaffirmed a 0.02 longer-run inflation objective, providing a conservative nominal-growth floor for an established retailer.[Federal Reserve Longer-Run Goals]· primary
Evidence against
- Home Depot describes an approximately $1.1 trillion fragmented addressable market and expects housing normalization to support growth faster than the general economy.[Home Depot 2025 Strategic Update]· primary
Base
low confidence$222.21
IV / share
-30.8% vs $321.05
- Explicit cash flows
- $56.21
- Terminal value
- $175.24
- Net cash
- -$9.24
- Intrinsic value / share
- $222.21
78.9% of the value rests on the terminal value — high dependency. A small change to terminal growth moves the valuation a lot — see terminal growth below.
Revenue growth4.0% → 3.8% → 3.5% → 3.2% → 3.0%medium
How derived: Starting from 0.057 second-quarter growth, 0.017 comparable growth, and management's 0.025-to-0.045 fiscal 2026 range, the path assumes acquisition and branch contributions normalize while established-location demand gradually improves.
Why this confidence: Guidance reaffirmed after two reported quarters ↑, Acquisition contribution obscures underlying organic growth ↓
Measured by
- Annual comparable-sales growth0.3%reported
- Annual capital spending as a share of sales2.2%derived
Price implies: 12.0% vs our 3.5% — one of several sets that fit this price
Evidence for
- Management reaffirmed fiscal 2026 total sales growth of 0.025 to 0.045, expects SRS organic growth in the mid-single digits, and plans approximately 15 stores and 40 to 50 SRS branches.[Home Depot Q2 FY2026 Earnings Transcript]· primary
Evidence against
- Fiscal 2025 comparable sales increased only 0.003, with transactions down 0.01 as high interest rates pressured broader home-improvement demand.[Home Depot FY2025 Form 10-K]· primary
Operating margin12.8%medium
How derived: Starting from the 0.127 fiscal 2025 result and 0.124-to-0.126 fiscal 2026 guidance, this case assumes productivity and moderate demand recovery offset acquisition mix sufficiently to restore margin to 0.128.
Why this confidence: Current reported and guided margin range ↑, SRS and GMS mix changes the consolidated economics ↓
Measured by
- Annual comparable-sales growth0.3%reported
- Annual reported profit margin12.7%reported
- Annual inventory turns4.4reported
Price implies: 18.3% vs our 12.8% — one of several sets that fit this price
Evidence for
- Management guides to an adjusted fiscal 2026 margin of 0.128 to 0.13 and reported a 0.147 adjusted margin in the seasonally strong second quarter.[Home Depot Q2 FY2026 Earnings Transcript]· primary
Evidence against
- Reported annual margin declined from 0.142 in fiscal 2023 to 0.127 in fiscal 2025, and management's current GAAP guidance remains below the base-case target.[Home Depot FY2025 Form 10-K]· primary
Tax rate24.3%high
How derived: Starting from the 0.239 fiscal 2025 effective rate and management's explicit 0.243 fiscal 2026 target, this case holds the guided rate constant because the recent three-year range has been narrow.
Why this confidence: Explicit current-year guidance ↑, Possible future tax-law changes ↓
No tracked driver measures this assumption yet.
Evidence for
- Management reaffirmed an approximately 0.243 effective tax rate for fiscal 2026.[Home Depot Q2 FY2026 Results]· primary
Evidence against
- The fiscal 2025 effective tax rate was lower at 0.239, and the three-year reported range was 0.237 to 0.24.[Home Depot FY2025 Form 10-K]· primary
Reinvestment rate22.0%low
How derived: Starting from capital spending near 0.022 of fiscal 2025 sales, planned spending near 0.025, and a 0.257 return on invested capital, this case retains 0.22 of after-tax operating profit to support stores, digital fulfillment, Pro distribution, and working capital.
Why this confidence: Company capital-spending plan ↑, Working-capital and acquisition spending are volatile ↓
Measured by
- Annual return on invested capital25.7%reported
- Annual capital spending as a share of sales2.2%derived
- Annual inventory turns4.4reported
Evidence for
- Management plans capital expenditures of approximately 0.025 of fiscal 2026 sales across stores, interconnected retail, and the Pro strategy.[Home Depot Q2 FY2026 Earnings Transcript]· primary
Evidence against
- Return on invested capital fell from 0.367 in fiscal 2023 to 0.257 in fiscal 2025, suggesting incremental investments may be less productive than the mature store base.[Home Depot FY2025 Form 10-K]· primary
Terminal growth2.5%medium
How derived: Starting from the Federal Reserve's 0.02 longer-run inflation and real-growth medians, this case uses 0.025 because Home Depot can add modest real growth through population, housing-stock maintenance, and share gains without assuming economy-beating growth forever.
Why this confidence: Official long-run economic projections ↑, Company-specific growth decades into the future is unobservable ↓
Measured by
- Annual return on invested capital25.7%reported
Evidence for
- Federal Reserve participants projected longer-run median real GDP growth of 0.02 and inflation of 0.02, leaving room for nominal growth above this assumption.[Federal Reserve June 2026 Economic Projections]· primary
Evidence against
- Home Depot's comparable sales were negative in fiscal 2023 and fiscal 2024 and only 0.003 positive in fiscal 2025, showing that mature demand can remain below nominal economic growth for several years.[Home Depot FY2025 Form 10-K]· primary
Bull
low confidence$283.78
IV / share
-11.6% vs $321.05
- Explicit cash flows
- $65.31
- Terminal value
- $227.71
- Net cash
- -$9.24
- Intrinsic value / share
- $283.78
80.2% of the value rests on the terminal value — high dependency. A small change to terminal growth moves the valuation a lot — see terminal growth below.
Revenue growth5.5% → 5.2% → 4.7% → 4.2% → 3.7%low
How derived: Starting from 0.057 second-quarter growth and management's 0.05-to-0.06 market-recovery framework, the path assumes housing turnover and larger projects recover while SRS, GMS, branches, and stores sustain share gains before growth moderates.
Why this confidence: Company quantified a housing-recovery scenario ↑, Recovery timing and magnitude are not current guidance ↓
Measured by
- Annual comparable-sales growth0.3%reported
- Annual capital spending as a share of sales2.2%derived
Evidence for
- Home Depot's own market-recovery case calls for total sales growth of 0.05 to 0.06 and comparable-sales growth of 0.04 to 0.05 when housing activity and larger projects recover.[Home Depot 2025 Strategic Update]· primary
Evidence against
- Current fiscal 2026 guidance remains lower at 0.025 to 0.045 total growth and 0.00 to 0.02 comparable growth.[Home Depot Q2 FY2026 Results]· primary
Operating margin13.5%low
How derived: Starting from the 0.127 fiscal 2025 margin and management's expectation that profit grows faster than sales in a recovery, this case restores margin to 0.135 through sales leverage, productivity, and integration benefits without returning fully to fiscal 2023's 0.142.
Why this confidence: Historical evidence that the company can earn higher margins ↑, Recovery leverage and acquisition synergies remain prospective ↓
Measured by
- Annual comparable-sales growth0.3%reported
- Annual reported profit margin12.7%reported
- Annual inventory turns4.4reported
Evidence for
- Management expects operating profit to grow faster than sales in its market-recovery case, and Home Depot achieved a 0.142 reported margin as recently as fiscal 2023.[Home Depot 2025 Strategic Update]· primary
Evidence against
- Fiscal 2026 reported-margin guidance is only 0.124 to 0.126, and acquired intangible amortization plus SRS and GMS mix weigh on reported profitability.[Home Depot Q2 FY2026 Results]· primary
Tax rate23.5%low
How derived: Starting from the stable 0.237-to-0.24 fiscal 2023-to-2025 range, this case assumes favorable credits, geographic mix, and deductible investment reduce the rate modestly to 0.235.
Why this confidence: Detailed reported tax reconciliation ↑, Assumed benefit is below current guidance ↓
No tracked driver measures this assumption yet.
Evidence for
- Tax credits reduced the fiscal 2025 effective rate by 0.008, while other adjustments reduced it by 0.009.[Home Depot FY2025 Form 10-K]· primary
Evidence against
- Management's current fiscal 2026 tax-rate target is higher at approximately 0.243, and the latest quarter's rate was 0.245.[Home Depot Q2 FY2026 Earnings Transcript]· primary
Reinvestment rate18.0%low
How derived: Starting from a still-high 0.257 fiscal 2025 return on invested capital and capital spending near 0.022 of sales, this case assumes stronger utilization of the existing store and distribution base allows faster growth while retaining only 0.18 of after-tax operating profit.
Why this confidence: High reported return on invested capital ↑, Faster growth normally requires additional working capital and distribution capacity ↓
Measured by
- Annual return on invested capital25.7%reported
- Annual capital spending as a share of sales2.2%derived
- Annual inventory turns4.4reported
Evidence for
- Home Depot produced a 0.257 return on invested capital in fiscal 2025, indicating that its established store and supply-chain assets remain productive.[Home Depot FY2025 Form 10-K]· primary
Evidence against
- Return on invested capital declined from 0.367 in fiscal 2023 to 0.257 in fiscal 2025, while management plans capital spending of approximately 0.025 of fiscal 2026 sales.[Home Depot FY2025 Form 10-K]· primary
Terminal growth3.0%low
How derived: Starting from combined longer-run real economic growth and inflation near 0.04, this case assigns Home Depot 0.03 perpetual growth to reflect durable housing-maintenance demand and share gains while remaining below nominal economic growth.
Why this confidence: Official long-run real-growth and inflation framework ↑, Perpetual company share gains cannot be observed or guaranteed ↓
Measured by
- Annual return on invested capital25.7%reported
Evidence for
- Federal Reserve participants' longer-run medians were 0.02 for real GDP growth and 0.02 for inflation, and Home Depot expects housing normalization to support growth faster than the general economy.[Federal Reserve June 2026 Economic Projections]· primary
Evidence against
- The company's mature comparable-sales record was negative in fiscal 2023 and fiscal 2024 and only slightly positive in fiscal 2025.[Home Depot FY2025 Form 10-K]· primary
Valuation robustness
reliability of the estimate, not a stock rating64 / 100 · Moderate
Formula v1.0.0. Higher means a more reliable estimate — not a recommendation.
Quality checks
Automated model-risk flags — warnings, not recommendations.
- 79% of the intrinsic value rests on the terminal value — a small change to terminal growth moves the valuation a lot.→ terminal growth
- The reinvestment assumption is low-confidence.→ reinvestment
Per-share economics
Business growth after changes in the diluted share count.
| Period | Revenue growth | FCF/share | FCF/share growth | Shares | Share growth |
|---|---|---|---|---|---|
| Q3 2025 | 6.6% | 3.44 | -3.6% | 993M | -0.6% |
| Q1 2026 | 9.4% | 3.54 | -24.5% | 994M | 0.2% |
| Q2 2026 | 4.9% | 3.75 | -20.7% | 994M | 0.2% |
| Q3 2026 | 2.8% | 3.13 | -9.1% | 995M | 0.2% |
| Q1 2027 | 4.8% | 5.21 | 47.1% | 996M | 0.2% |
| Q2 2027 | 5.7% | 4.53 | 20.8% | 996M | 0.2% |
Valuation history every run
History builds as the valuation is recalculated — this is the first recorded run.
Market inputs researched
The 0.0463 U.S. Treasury 10-year par yield on 2026-09-03 is used as the dollar risk-free rate matching the DCF's long duration.
The published five-year monthly regression beta of 0.95 is used as the observable market-sensitivity estimate for Home Depot shares.
The 0.0418 forward-looking U.S. implied equity premium calculated on 2026-07-01 is used instead of a historical-return average.
The unadjusted Home Depot closing price on the latest completed trading day, 2026-09-04, was 321.05.
Generated 9/5/2026, 5:49:21 PM · pipeline v1.2.0