The Home Depot, Inc. (HD) Fair Value & PE Analysis
Home Improvement · NYSE
Current Price
$284.85
PE Ratio (TTM)
19.9x
Intrinsic Value
$305.24
+6.7% margin of safety
What Is The Home Depot, Inc.'s Fair Value?
As of 2026-10-07, applying a 19.9x earnings multiple to The Home Depot, Inc.'s (HD) earnings per share of $14.31 yields a fair value estimate of $305.24 per share, versus a market price of $284.85.
Fair value from earnings multiples is sensitive to the multiple you choose. Across the sensitivity grid the estimate spans $247.01 to $372.17. This is a relative estimate anchored to earnings, not a statement of fact. For a cash flow based view, see the intrinsic value estimate on the DCF page.
How the PE model works · Recalculate in PE mode · HD intrinsic value (DCF view)
Is The Home Depot, Inc. (HD) Overvalued?
At $284.85, HD trades about 6.7% below its PE-based fair value estimate, a modest discount to its earnings power, though not enough to call it cheap outright.
COMPETITIVE MOAT
↑Massive Scale and Distribution Network
Home Depot's extensive network of over 2,300 stores provides unparalleled physical reach. This scale allows for efficient inventory management and rapid product availability across diverse geographic markets.
↑Strong Pro Customer Relationships
The company cultivates deep loyalty with professional contractors through dedicated services, credit programs, and bulk purchasing power. This segment represents a significant and recurring revenue stream.
↑Brand Recognition and Trust
Home Depot is a household name synonymous with home improvement. This established brand equity fosters customer confidence and reduces perceived risk for shoppers.
INVESTMENT RISKS
↓Competition from Online Retailers
Pure-play online retailers and specialized e-commerce platforms continue to challenge traditional brick-and-mortar stores. They can offer convenience and competitive pricing, potentially eroding market share.
↓Economic Downturn and Housing Market Volatility
Home improvement spending is highly cyclical and sensitive to economic conditions. A significant recession or downturn in the housing market could severely impact sales and profitability.
↓Supply Chain and Input Cost Volatility
Global supply chain disruptions and fluctuating costs for raw materials and energy can pressure margins. Home Depot's efforts to manage these are ongoing but remain a persistent challenge.
Base case
HD base case PE valuation
Intrinsic Value
$305.24
Margin of safety
+6.7%
Expected annual return
+1.4%
Base case assumptions: 6.3% annual earnings growth, 19.91x target PE, 10% discount rate, 5 year projection. Data as of 2026-10-07.
This base case uses default assumptions and is not financial advice. The fair value changes significantly when the target PE or earnings growth rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the HD PE valuation
Adjust the target PE, earnings growth, and discount rate to see how the fair value and margin of safety for The Home Depot, Inc. respond.
Open PE 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 PE Stock Valuation Data
PE Ratio (TTM)
19.9x
PEG Ratio
n/m
Earnings Yield
5.02%
ROE (TTM)
102.7%
Revenue/Share (TTM)
$170.20
Dividend Yield
3.26%
Debt/Equity
3.77x
Frequently Asked Questions
What is the PE ratio of HD?
The trailing twelve-month PE ratio of HD reflects how much investors pay per dollar of The Home Depot, Inc.'s earnings. This metric is most useful when compared to Home Improvement peers and the company's own historical range.
Is HD overvalued based on PE ratio?
HD's PE of 19.9x combined with a PEG ratio of -6.82 provides a growth-adjusted perspective. HD has negative earnings, so its PE and PEG ratios are not meaningful here and cannot tell you whether the stock is over or undervalued. Keep in mind that PE-based valuation works best for profitable, mature companies — for high-growth or cyclical Home Improvement, a DCF analysis may be more appropriate.
How do I value HD stock using PE ratio?
To value The Home Depot, Inc. using PE: (1) Compare the current PE (19.9x) against the Home Improvement median to assess relative pricing, (2) check the PEG ratio (-6.82) to adjust for growth expectations, (3) review the 5-year PE range to identify where the stock sits historically, and (4) estimate fair value by multiplying a target PE by forward EPS estimates. This relative approach complements DCF's absolute valuation.
What is the PEG ratio of HD?
HD's PEG ratio is -6.82, calculated by dividing the PE ratio (19.9x) by the expected earnings growth rate. Because HD has negative earnings, its PEG ratio is not meaningful and should not be read as a sign of under or overvaluation. Note that PEG accuracy depends on the reliability of growth estimates.
Should I use PE ratio or DCF for HD stock valuation?
PE ratio gives a quick relative read — how HD is priced versus Home Improvement peers. DCF provides an absolute value based on projected free cash flows. For HD, with a strong ROE of 102.7%, both methods are worth using — PE for a market-relative check, DCF to stress-test whether fundamentals justify the price. Each method has blind spots: PE ignores capital structure and cash flow quality, while DCF is sensitive to growth and discount rate assumptions.
Learn More
- See HD DCF Valuation → — Intrinsic value via Discounted Cash Flow analysis
- PE Methodology — Step-by-step guide to PE ratio stock valuation
- DCF Methodology — Guide to discounted cash flow analysis
- PE Ratio — Understanding the price-to-earnings ratio
- Intrinsic Value — How to evaluate stock fair value
Related PE Valuations
All Consumer Cyclical valuationsP/E and DCF value HD with different methods and assumptions, so the two conclusions can differ. Compare the DCF intrinsic value.
Price as of 2026-10-07. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.