Home Depot, Inc. (HD) stock analysis

P/E above its 5-year median

Home Depot's P/E of 24.4 is above its own 5-year median of 23.1.

P/E above the industry

Home Depot's P/E of 24.4 is above the Consumer discretionary median of 18.7.

EV/EBITDA above its 5-year median

Home Depot's EV/EBITDA of 16.3 is above its 5-year median of 15.8.

P/B above the industry

Home Depot's price-to-book of 20.94 is above the Consumer discretionary median of 4.57.

Trading above fair value

The share price of $348.69 is above our fair value estimate of $262.61.

Margin of safety under 20%

The price is 32.8% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 1.5% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew -5.2% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew -2.7% over the last twelve months, against a 5-year average of 1.9% a year.

Growing slower than the industry

Revenue grew 2.5% over the last twelve months; the Consumer discretionary median is 2.5%.

Guidance raised

Home Depot raised its fiscal 2025 Total sales growth outlook on Nov 18, 2025.

Gross margin slipping

Gross margin was 33.2% over the last twelve months, against 33.3% a year earlier.

Return on equity over 15%

Return on equity was 104% over the last twelve months and averaged 936% over five years.

Return on capital over 10%

Return on invested capital was 25.0%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Home Depot's return on equity of 104% is above the Consumer discretionary median of 9.9%.

Earnings grew over 5 years

Net income grew 1.9% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 8.4% over the last twelve months, against a 5-year average of 9.9%.

Net margin above the industry

Home Depot's net margin of 8.4% is above the Consumer discretionary median of 6.2%.

High debt

Debt is 318% of shareholders' equity, above the 40% we consider low.

Debt falling against equity

Debt to equity fell from 1129% five years ago to 318%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 35.5% of total debt.

Interest well covered

Operating income covers interest expense 8.7 times.

Short-term assets cover short-term debts

Current assets are 1.08 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 5.71; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Home Depot paid dividends worth 2.7% of the share price over the last twelve months.

Yield below Treasuries

The 2.7% yield is below the 4.7% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Home Depot yields 2.7%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 64.8% of net income.

Covered by free cash flow

Dividends take 61.1% of free cash flow.