The Home Depot, Inc. (HD) Intrinsic Value & DCF Valuation
Home Improvement · NYSE
Current Price
$328.39
Intrinsic Value
$344.67
+4.7% margin of safety
What Is The Home Depot, Inc.'s Intrinsic Value?
As of 2026-06-12, our base-case DCF model estimates the intrinsic value of The Home Depot, Inc. (HD) at $344.67 per share, compared with a market price of $328.39, a margin of safety of +4.7%. The base case assumes 6.4% annual free cash flow growth and a 10.0% discount rate.
Across the sensitivity grid the estimate spans $282.69 to $415.67. Intrinsic value is an estimate built on assumptions, not a fact. A higher discount rate or slower growth pushes the estimate down, while stronger cash flow growth lifts it.
How our DCF works · Recalculate with your own assumptions · What is intrinsic value?
Is The Home Depot, Inc. (HD) Undervalued?
At $328.39, HD trades about 4.7% below our base-case intrinsic value estimate. That is a real discount, but it stays short of the 30% margin of safety we require before calling a stock undervalued.
COMPETITIVE MOAT
↑Interconnected Retail Dominance
Home Depot's integrated online and in-store experience drives significant sales and double-digit online growth, even in a tough market.
↑Brand Recognition and Scale
The Home Depot brand is a household name, offering unparalleled selection and convenience that is difficult for smaller competitors to replicate.
↑Pro Customer Loyalty
Strong relationships and services tailored to professional contractors foster significant repeat business and loyalty, a key segment for the company.
INVESTMENT RISKS
↓Cyclical Demand Sensitivity
The business is highly dependent on strong household finances and consumer confidence, making it vulnerable to economic downturns.
↓Interest Rate Sensitivity
Higher interest rates can dampen consumer spending on home improvement projects and new home purchases, impacting sales.
↓Competition from Online Retailers
While Home Depot has a strong online presence, it still faces competition from pure-play e-commerce retailers and specialized online suppliers.
Base case
HD base case valuation
Intrinsic Value
$344.67
Margin of safety
+4.7%
Expected annual return
+1.0%
Base case assumptions: 6.4% annual growth, 10.0% discount rate, 23x exit multiple, 5 year projection. Data as of 2026-06-12.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the HD valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for The Home Depot, Inc. respond.
Open DCF Calculator for HDCompany Overview
The Home Depot, Inc. operates as a prominent retailer specializing in home renovation and improvement. Through its expansive network of "The Home Depot" stores, it furnishes consumers with an extensive array of goods, including building materials, home enhancement products, lawn and garden supplies, decorative items, and facilities maintenance, repair, and operational (MRO) supplies. In addition to selling products, the company extends professional installation services for key home features like flooring, cabinetry (including makeovers), countertops, furnaces and central air conditioning systems, and window replacements. Customers can also access tool and equipment rental options. Its diverse clientele includes both individual homeowners and a broad spectrum of professional clients, such as renovators, general contractors, maintenance personnel, handymen, property managers, building service contractors, and specialized tradespeople like electricians, plumbers, and painters. The firm also distributes its merchandise through several online platforms, notably homedepot.com, along with specialized sites such as blinds.com for bespoke window coverings and thecompanystore.com for home textiles and decorative goods. By the end of 2021, the corporation operated a total of 2,317 outlets across the United States. Incorporated in 1978, The Home Depot, Inc. maintains its corporate headquarters in Atlanta, Georgia.
Financial Metrics — HD Stock Valuation Data
Revenue/Share (TTM)
$167.60
FCF/Share (TTM)
$14.40
ROIC (TTM)
20.4%
ROE (TTM)
113.3%
P/FCF
22.9x
EV/EBITDA
16.6x
FCF Yield
4.37%
Debt/Equity
4.18x
Based on trailing twelve-month data, HD shows a free cash flow per share of $14.40 and a ROIC of 20.4%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 22.9x and FCF yield of 4.37% are important context metrics when evaluating HD's stock valuation relative to peers.
Frequently Asked Questions
What is the intrinsic value of HD?
The Home Depot, Inc. currently generates $14.40 in free cash flow per share. At the current price of $328.39, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is HD undervalued?
HD trades at a P/FCF ratio of 22.9x with a free cash flow yield of 4.37%. This P/FCF is in a moderate range. However, whether HD is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value HD stock using DCF?
To perform a DCF valuation on The Home Depot, Inc.: (1) Start with the trailing free cash flow per share ($14.40) 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 — with a debt-to-equity of 4.18x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to HD?
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 company will produce over the next 5-10 years, shaped by Home Improvement trends, then discounting those amounts to today's dollars. HD's ROIC of 20.4% indicates strong capital efficiency, which supports higher growth assumptions in the DCF model.
How does WACC affect HD stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For HD, with a debt-to-equity ratio of 4.18x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 16.6x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See HD PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Consumer Cyclical valuationsDCF and P/E value HD with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-06-12. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.