Is The Home Depot, Inc. (HD) overvalued or undervalued?
Updated Nov 10, 2026 · hand-researched model · educational, not advice
At a recent price of $353.42, The Home Depot, Inc. (HD) sits inside a range too wide to call either way: our valuation lenses put the business somewhere between $144.04 and $401.91 per share. They disagree too widely for us to state a single fair value. We publish the range rather than a midpoint because a number that precise would claim more than the methods can support. This is an educational model, not a price target or a recommendation.
The valuation discounts The Home Depot, Inc.'s projected free cash flows at a weighted-average cost of capital (WACC) of 9.1%, with a long-run terminal growth rate of 2.5%. About 74% of the enterprise value comes from the terminal value — the portion beyond the explicit forecast window — which is typical for a stable, cash-generative business and a reminder that small changes in the discount rate or terminal growth assumption swing the intrinsic value meaningfully.
Running the DCF in reverse — solving for the growth the current price already assumes — the market is implying roughly 11.7% annual revenue growth for HD. Our base case instead compounds to about 3.8% a year over the same forecast, so the market is pricing in materially faster growth than our base case. The reverse-DCF is a quick sanity check: it reframes 'is this stock cheap?' as 'do I believe the growth the price requires?' rather than arguing over a single point estimate of fair value.
Sensitivity matters more than any single number. Across a reasonable band of discount-rate assumptions, HD's modeled DCF value ranges from about $135.84 to $339.15 per share. If that range still sits below today's price, the market is optimistic relative to the model across the whole band; if it brackets the price, the stock is roughly fairly valued on our assumptions. Use the interactive slider to see exactly where your own cost-of-capital view lands.
How to read this page: the DCF fair value is what The Home Depot, Inc. would be worth if its cash flows grow as modeled and are discounted at the stated WACC. The assumptions table shows every input and its source; the reverse-DCF shows what the market believes; the sensitivity band shows how fragile the answer is. None of this is investment advice — it is a transparent, auditable framework for forming your own view of HD's intrinsic value. Figures update as new filings and prices come in.
The assumptions behind HD's DCF
| Input | Value | Source |
|---|---|---|
| Base-year revenue | $164,683,000,000 | Home Depot FY2025 10-K (accession 0001628280-26-019436, filed 2026-03-18), 52 weeks ended 2026-02-01: Net sales $164,683M, +3.2% on FY2024's $159,514M. THE HEADLINE GROWTH FLATTERS THE BUSINESS IN ONE DIRECTION AND UNDERSTATES IT IN ANOTHER: SRS (acquired 2024-06-18) and GMS (acquired 2025-09-04) together added ~$6.3B of incremental sales, while FY2024 carried a 53rd week worth ~$2.5B. Comparable sales were +0.3% (transactions -1.0%, ticket +1.4%) - the first positive comp year after -3.2% (FY2023) and -1.8% (FY2024), and the 10-K attributes the weakness to 'a persisting high interest rate environment' pressuring home-improvement demand. FY2025 is a clean 52-week year, so no extra-week adjustment is needed. UNCHANGED as the base - the DCF grows it by forecast.revenue_growth. CROSS-CHECK: H1 FY2026 (26 weeks to 2026-08-02) net sales $89,626M, +5.3% on $85,133M (8-K Ex-99.1, 2026-08-18), of which GMS contributed ~$2.8B (10-Q MD&A); comps +1.2% (Q2 +1.7%). Trailing twelve months to 2026-08-02: $169,176M. |
| Base EBIT margin | 12.7% | Home Depot Q4/FY2025 earnings release, 8-K Ex-99.1 (accession 0000354950-26-000026, filed 2026-02-24) + FY2025 10-K (accession 0001628280-26-019436): GAAP operating income $20,890M / net sales $164,683M = 12.68% (us-gaap:OperatingIncomeLoss, ties to the 10-K). GAAP, i.e. AFTER $607M of acquired-intangible amortization; management's adjusted margin, which adds it back, was 13.1% ($21,497M). The trend is the story (same tag, 10-K filings): 14.4% FY2019, 15.2% FY2021, 15.3% FY2022 peak, 14.2% FY2023, 13.5% FY2024, 12.7% FY2025 - three years down, from (a) deleverage on negative-to-flat comps, (b) mix: the lower-margin SRS/GMS distribution businesses (the 'Other' segment earned $263M of operating income on $9,057M of sales in H1 FY2026, 2.9% after amortization), and (c) SG&A up 6.8% in FY2025 on payroll. CROSS-CHECK H1 FY2026: GAAP 13.19% ($11,820M) vs 13.73% in H1 FY2025, and 12.42% excluding the ~$685M of IEEPA tariff refunds booked in cost of sales - a ~130bp YoY decline in the underlying first-half margin. Operating leases: the $1,846M of FY2025 operating lease cost stays inside this EBIT, consistent with leaving operating lease liabilities out of net debt. |
| Forecast revenue growth | 4% → 4% → 4% → 4% → 4% | Assumption — TickerWorth's 5-year explicit forecast |
| Risk-free rate | 5.2% | US 10Y Treasury constant maturity (FRED DGS10): 5.24% on 2026-10-01, the latest published observation. Shared by every model in this tracker. For Home Depot this is not only a discount-rate input: the same rate drives the mortgage rates that hold housing turnover down, so a high risk-free rate hurts this valuation twice. |
| Beta | 0.95 | Yahoo Finance 5Y-monthly beta via yfinance, read 2026-10-03: Published 5Y-monthly beta 0.955, used AS IS - no normalization. The window covers the 2021-22 housing boom and the 2022-23 rate shock, both genuine housing-cycle exposure rather than one-off noise, so there is nothing to strip out. Each 0.1 of beta is worth roughly $17/share (0.855 gives ~$217). |
| Terminal growth | 2.5% | Assumption — house default: House default 2.5% (roughly long-run nominal GDP), kept for comparability with every other company in this tracker. For Home Depot it is if anything slightly conservative: net sales grew from $94.6B (FY2016) to $164.7B (FY2025), ~6.4% a year, though roughly a third of the last two years' growth was bought (SRS, GMS) and FY2020-21 carried a pandemic step-up. 3.0% adds ~$16/share; 2.0% takes ~$14 off. Must remain < WACC of 9.13%. |
| Diluted shares | 996M | Home Depot Q2 FY2026 10-Q (accession 0001628280-26-058715) Note 8 + 8-K Ex-99.1 (2026-08-18): Q2 FY2026 (13 weeks to 2026-08-02) weighted-average diluted shares 996M (basic 994M + 2M dilutive awards); H1 also 996M; FY2025 995M. Reported in whole millions only. Shares outstanding 997.69M at 2026-08-18. The count is FLAT and drifting up: buybacks have been paused since March 2024 (SRS) and the 10-Q says there are no plans to resume them in FY2026 'as we seek to reduce our outstanding debt'; the CFO said on 2026-09-15 they would resume around the end of Q2 FY2027 once leverage reaches ~2.0x. SBC ($524M in FY2025) dilution is small. |
| Market price | $353.42 | Delayed quote · as of 2026-11-10 05:00 UTC |
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