One-glance verdict
Overvalued
$221.60 our estimate vs market $321.05
Wall Street consensus: $377.50 (70.4% higher than our fair-value estimate)
45% above our estimate, beyond the bull case
Fundamentals snapshot
The Home Depot, Inc.
HD · NYQ · Consumer Cyclical · Home Improvement Retail
Current price
$321.05
52-week range
$289.10 - $426.75
Market cap
$320.31B
Balance sheet
Distressed
8.66x Adequate
Net debt $61.10B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
3 Risks
3 rewards · 3 risks
- Reward Revenue grew 2.7% last year.
- Reward Returns 104.3% on equity, ahead of 80% of its peers.
- Risk Net debt grew 34.4% over 3 years.
- Risk Operating margin compressed from 15.3% to 12.9% over 3 years.
What this company does
The Home Depot, Inc.
Home Depot is a massive home improvement retailer where people buy things like lumber, paint, and appliances for their homes. It makes money by selling to both regular homeowners tackling projects and professional contractors who do renovations for a living. Since so many people rely on it for home projects, the company's sales are often a good signal for the health of the housing market and consumer spending.
How the company got here
The Home Depot was founded in 1978 by Bernie Marcus and Arthur Blank, who envisioned warehouse-sized stores for home improvement. They opened their first two stores in Atlanta, Georgia, in 1979, offering a vast selection of products and knowledgeable staff. The company grew rapidly, going public in 1981 and surpassing competitors to become the largest home improvement retailer in the U.S. by 1989. Key to its success was catering to both do-it-yourself (DIY) homeowners and professional contractors from early on.
What it actually does
The Home Depot is a large retail company that sells products and services for home improvement, construction, and maintenance. In its massive stores and online, you can find everything from building materials like lumber and paint to appliances, garden supplies, and home decor. Beyond just selling products, the company also offers services like tool and equipment rental and installation for various items such as flooring and water heaters. They serve two main types of customers: everyday homeowners working on their own projects and professional contractors who do this work for a living.
Do-It-Yourself (DIY) Customers
This part of the business focuses on homeowners who prefer to tackle home repair and improvement projects themselves. These customers buy a wide range of products, from paint and gardening supplies to lighting fixtures and tools. To support them, Home Depot provides in-store workshops and online guides to teach them the necessary skills for their projects. While professional contractors spend more per visit, the large number of DIY customers makes them a very important part of the company's sales.
Professional (Pro) Customers
This segment is dedicated to serving professional contractors, remodelers, and tradespeople like electricians and plumbers. While these "Pro" customers are a smaller group, they account for roughly half of the company's sales because they buy in larger quantities and more frequently. Home Depot caters to them with specialized services like bulk pricing, dedicated staff, and direct delivery to job sites. The company has been increasingly focused on this area, making acquisitions to offer a wider range of specialized building materials.
Installation and Other Services
Beyond selling products off the shelf, Home Depot generates a smaller portion of its revenue from services that help customers complete their projects. This includes arranging for the installation of products like carpets, cabinets, and windows through a network of independent contractors. The company also offers tool and truck rentals, which provide another stream of income and convenience for both DIY and Pro customers. These services help make Home Depot a one-stop shop for home improvement needs.
What management is betting on now
Management's current strategy focuses on three main areas: enhancing the shopping experience, expanding its services for professional customers, and seamlessly connecting its physical stores with its online operations. They are investing heavily in technology to make shopping easier, whether it's through their website, mobile app, or in the store. A major priority is to "win the Pro" by offering a complete ecosystem of products, services, and delivery options tailored to contractors' needs, which they see as a significant opportunity for growth. This combined online and in-store approach, often called an omnichannel strategy (a strategy that integrates different methods of shopping), aims to provide a smooth and convenient experience for all customers.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2025 Q3
$3.42B
FY2025 Q4
$3.57B
FY2026 Q1
$3.52B
FY2026 Q2
$3.73B
FY2026 Q3
$3.11B
FY2026 Q4
$2.29B
FY2027 Q1
$5.19B
FY2027 Q2
$4.51B
Revenue
$47.86B
Net income
$4.77B
Diluted EPS
4.79
Operating cash flow
$5.39B
Free cash flow
$4.51B
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Sources
Revenue
$41.77B
Net income
$3.29B
Diluted EPS
3.30
Operating cash flow
$6.03B
Free cash flow
$5.19B
Fetching…
Sources
Revenue
$38.20B
Net income
$2.57B
Diluted EPS
2.58
Operating cash flow
$3.35B
Free cash flow
$2.29B
Fetching…
Sources
Revenue
$41.35B
Net income
$3.60B
Diluted EPS
3.62
Operating cash flow
$4.01B
Free cash flow
$3.11B
Fetching…
Sources
Revenue
$45.28B
Net income
$4.55B
Diluted EPS
4.58
Operating cash flow
$4.64B
Free cash flow
$3.73B
Fetching…
Sources
Revenue
$39.86B
Net income
$3.43B
Diluted EPS
3.45
Operating cash flow
$4.33B
Free cash flow
$3.52B
Fetching…
Sources
Revenue
$39.70B
Net income
$3.00B
Diluted EPS
3.01
Operating cash flow
$4.67B
Free cash flow
$3.57B
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Sources
Revenue
$40.22B
Net income
$3.65B
Diluted EPS
3.67
Operating cash flow
$4.23B
Free cash flow
$3.42B
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Sources
Is it cheap or expensive?
Fair value $221.60 vs current price $321.05
Wall Street consensus is the average analyst price target: $377.50 (70.4% higher than our fair-value estimate).
Our most-likely fair value is $221.60 a share — about 31.0% below today's price of $321.05, so the stock currently looks expensive (overvalued).
Is it drowning in debt?
Distressed
Net debt $61.1B. Interest coverage 8.7x.
Net debt
$61.10B
Interest coverage
8.66x
The Home Depot, Inc.'s profit covers its interest bill about 8.7 times over. which is stronger than most peers shown here.
Distressed
Worse cushion
Baseline
Better cushion
HD
BASELINE
The Home Depot, Inc.
Total debt $63.19B Interest coverage 8.66x This is the baseline the peer rows are being compared against.
Total debt $42.03B Interest coverage 6.65x -23% vs HD Carries about 1.3x less debt cushion than HD.
Total debt $15.03B Interest coverage 8.16x -6% vs HD Has roughly the same debt cushion as HD.
Total debt $6.54B Interest coverage 21.22x +145% vs HD Carries about 2.5x more debt cushion than HD.
Total debt $2.01B Interest coverage 23.97x +177% vs HD Carries about 2.8x more debt cushion than HD.
Total debt $5.24B Interest coverage 2.87x -67% vs HD Carries about 3.0x less debt cushion than HD.
What you should know
The case for and against HD
3 Rewards
3 Risks
Rewards
-
Revenue grew 2.7% last year.
-
Returns 104.3% on equity, ahead of 80% of its peers.
-
Free cash flow was positive in 10/10 years.
Risks
-
Net debt grew 34.4% over 3 years.
-
Operating margin compressed from 15.3% to 12.9% over 3 years.
-
Insider ownership is only 0.1% (peer median: 1.3%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
22.47x
Forward P/E
20.02x
P/B
19.28x
P/S
1.89x
EV/EBITDA
15.47x
PEG ratio
1.79x
Profitability
How much profit each dollar creates
Gross margin
32.8%
Operating margin
12.9%
Net margin
8.4%
ROE
104.3%
ROA
12.1%
Health
Liquidity and balance-sheet strength
Debt / equity
3.80x
Current ratio
1.08x
Quick ratio
0.26x
Total debt
$63.19B
Total cash
$2.08B
Growth
How the business has been compounding
Revenue TTM
$169.18B
Revenue 5Y CAGR
2.2%
EPS TTM
14.29
EPS 5Y CAGR
-5.2%
Cash flow
How much cash the business throws off
Operating CF TTM
$18.78B
Free CF TTM
$12.65B
FCF margin
7.5%
Dividend
Shareholder payout
Yield
2.9%
Payout ratio
64.8%
Last ex-div date
2026-09-03