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HD trades against a final fair-value range of $192.08-$319.01, with the midpoint set by the accepted valuation synthesis rather than earlier draft model outputs. Fair value range: low $192, high $319, with mid-point at $255.
Stock analysis

HD HD fair value $192–$319

HD
By StockMarketAgent.AI team· supervised by
Analyzed: 2026-05-08Next update: 2026-08-08Methodology v2.5Review: automatedArchetype: Mature compounder
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Last price
$322.64
▼ -67.28 (-20.85%)
Fair value
$255
$192–$319
Rating
Reduce
confidence 88/100
Upside
-20.9%
upside to fair value
Margin of Safety
$217.06
MoS level · 15%
Market Cap
$321.4B
P/E fwd 19.8

§1 Executive summary

  • Composite fair value $255 with high case $319.
  • Implied downside of 20.9% to fair value.
  • Moat 9/10 · confidence 88/100 · Mature compounder.
  • Currently screens above fair value, so patience matters more than entry speed.
Fair value
$255
Margin of safety
-26.3%
Confidence
88/100
Moat
9/10

Educational analysis only — not financial advice. Always do your own due diligence.

$322.64Price
Low $192.08
Mid $255.36
High $319.01

HD trades against a final fair-value range of $192.08-$319.01, with the midpoint set by the accepted valuation synthesis rather than earlier draft model outputs.

  • Scale advantages in procurement and
    Scale advantages in procurement and distribution
  • Deep penetration and loyalty with
    Deep penetration and loyalty with Pro customers
  • Bull thesis
    Intrinsic cash flow models strictly signal downside expectation risk.

§2 Bear case

A higher-for-longer interest rate regime freezes housing turnover indefinitely. Pro backlog evaporates, triggering intense promotional activity to defend market share against Lowe's. Operating margins structurally reset below 12% as fixed cost leverageLeverageThe proportion of debt in the company's capital structure. Commonly measured as Debt/EBITDA, Debt/Equity, or Net Debt/EBITDA. reverses.

Ways this thesis can break

Mortgage Lock-in Stagnation

· High

Existing home sales remain depressed as homeowners refuse to give up low-rate mortgages, crushing big-ticket remodeling demand.

FV impact
Pushes valuation toward the $192.08 low-end estimate.
Trigger
12-24 months

Consumer Credit Cycle Deterioration

· Medium

A broader macroeconomic downturn depletes consumer savings, effectively erasing DIY discretionary spending across the store footprint.

FV impact
Forces multiple compression and significant EPS downgrades.
Trigger
6-18 months

Pro Customer Bankruptcies

· Low

Small-to-medium contractors face liquidity crunches, leading to canceled projects, shrinking backlogs, and elevated inventory markdown risks.

FV impact
Breaks the primary revenue growth engine, anchoring fair value below $200.
Trigger
18-36 months
Early-warning signals to monitor
MetricCurrentTrigger threshold
Sequential declines in big-ticket transactions exceeding $1,000.MonitorDeterioration versus the report thesis
Existing home sales dropping sustainably below 3.5 million annualized.MonitorDeterioration versus the report thesis
Gross margin contraction exceeding 50 basis points.MonitorDeterioration versus the report thesis
Pro customer sales materially lagging DIY sales growth.MonitorDeterioration versus the report thesis
Inventory growing faster than sales for two consecutive quarters.MonitorDeterioration versus the report thesis

§3 Financial history

Income statement — last six periods
Line itemT−0T−1T−2T−3T−4CAGR
Period2022-01-312023-01-312024-01-312025-01-312026-01-31Trend
Revenue$151.16B$157.40B$152.67B$159.51B$164.68B+2.2%
Gross profit$50.83B$52.78B$50.96B$53.31B$54.87B+1.9%
Operating income$23.04B$24.04B$21.69B$21.53B$20.89B-2.4%
Net income$16.43B$17.11B$15.14B$14.81B$14.16B-3.7%
EPS (diluted)$15.53$16.69$15.11$14.91$14.23-2.2%
EBITDA$25.95B$27.07B$25.11B$25.49B$25.14B-0.8%
R&D——————
SG&A$25.41B$26.28B$26.60B$28.75B$30.70B+4.8%

Quality scores

Piotroski F-score
4 / 9
0–9 quality composite
Altman Z-score
5.6
Bankruptcy risk (>3 safe)
Beneish M-score
-2.4
Earnings manipulation risk
OCF / Net income
1.15×
>1 indicates high earnings quality
Accounting quality gate
Pass
Sector-adjusted gate
ROIC
21.2%
Return on invested capital
§3

Numbers analysis

Cash flow

Cash-flow quality is reflected in the OCFOperating cash flowCash generated from the company's core operations after working-capital changes but before capital expenditures. The first line of the cash-flow statement. / net incomeNet IncomeNet Income is an income-statement line item used to reconcile revenue to operating profit, pre-tax income, net income, or per-share earnings. It should be compared across periods and against peer disclosure conventions., accounting-quality, and ROICROICReturn on invested capital. Operating profit (after tax) divided by invested capital. The single best gauge of capital-efficiency. Spread over WACC = economic value created. rows above.

Capital allocation

Capital allocation should be evaluated against reinvestment needs, balance-sheet strength, and shareholder returns.

Individual subscribers — §4 onwards11 more sections

Read the full analysis — 11 more sections.

Competitive moat, industry cycle, peer comparison, intrinsic valuation, sensitivity, scenarios, earnings decision tree, position management, investor perspectives, scorecard, and final recommendation.

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FAQ

HD — frequently asked questions

  1. Based on our latest analysis, HD looks meaningfully overvalued. The current price is $323 versus a composite fair-value midpoint of $255 (range $192–$319), which implies roughly 20.9% downside to the midpoint.

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