Home Improvement · NYSE
Current Price
$322.81
Intrinsic Value
Use the calculator below to estimate
Run a full DCF analysis on The Home Depot, Inc. with auto-filled fundamentals, adjustable assumptions, and sensitivity heatmap.
The Home Depot, Inc. operates as a home improvement retailer. It operates The Home Depot stores that sell various building materials, home improvement products, lawn and garden products, and décor products, as well as facilities maintenance, repair, and operations products The company also offers installation services for flooring, cabinets and cabinet makeovers, countertops, furnaces and central air systems, and windows. In addition, it provides tool and equipment rental services. The company primarily serves homeowners; and professional renovators/remodelers, general contractors, maintenance professionals, handymen, property managers, building service contractors, and specialty tradesmen, such as electricians, plumbers, and painters. It also sells its products through websites, including homedepot.com; blinds.com, an online site for custom window coverings; and thecompanystore.com, an online site for textiles and décor products. As of December 31, 2021, the company operated 2,317 stores in the United States. The Home Depot, Inc. was incorporated in 1978 and is based in Atlanta, Georgia.
ROIC (TTM)
19.0%
ROE (TTM)
130.0%
FCF Yield
3.93%
Based on trailing twelve-month data, HD shows a free cash flow per share of N/A and a ROIC of 19.0%, key inputs for stock valuation using the DCF method. The P/FCF ratio of N/A and FCF yield of 3.93% are important context metrics when evaluating HD's stock valuation relative to peers.
The intrinsic value of HD depends on assumptions about future growth rate, discount rate (WACC), and terminal value. A DCF model discounts projected free cash flows back to present value — small changes in WACC can shift the estimate by 20% or more, which is why sensitivity analysis is essential.
Whether HD is undervalued depends on comparing the DCF-derived intrinsic value to the current market price of $322.81. A positive margin of safety (intrinsic value above market price) suggests potential undervaluation, but the degree of confidence depends on the reliability of your growth and discount rate assumptions.
To perform a DCF valuation on The Home Depot, Inc.: (1) Start with the trailing free cash flow per share as the base, (2) project future FCF growth over 5-10 years based on Home Improvement industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting HD's risk profile, and (4) add a terminal value for cash flows beyond the projection period.
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For The Home Depot, Inc., this means projecting how much free cash flow the Home Improvement will produce over the next 5-10 years, then discounting those amounts to today's dollars. HD's ROIC of 19.0% indicates strong capital efficiency, which supports higher growth assumptions in the DCF model.
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For HD, the capital structure and equity risk premium determine WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%.
