Is The Home Depot, Inc. (HD) Fairly Valued?
The Home Depot, Inc. valuation review using P/E, fair value, revenue growth, EPS growth, net margin, and TGMCharts chart exhibits as of June 26, 2026.
By TGMCharts Research / 5 min read / Data as of / Updated
Valuation read
The Home Depot, Inc. does not get a one-metric verdict. The stock trades at 24.78x trailing earnings and the TGMCharts fair-value model is $298, so the valuation read depends on whether growth and margins support that price.
The core evidence is the relationship between price, earnings, fair value, and business support. Five-year revenue CAGR is 3.34%, five-year EPS CAGR is 3.56%, and net margin is 8.41%. Those facts decide whether the multiple is defensible or stretched.
What to watch
- A material move away from the fair-value anchor of $298.
- A break in five-year EPS support, currently 3.56%.
- Margin quality drifting away from the latest net margin of 8.41%.
From the latest filing
10-Q · filed 2026-05-27 · period 2026-05-03 · SEC EDGAR source
- “Gross Profit Gross profit for the first quarter of fiscal 2026 increased 2.4% to $13.8 billion from $13.5 billion for the first quarter of fiscal 2025.”
- “SG&A for the first quarter of fiscal 2026 increased $429 million, or 5.7%, to $8.0 billion from $7.5 billion for the first quarter of fiscal 2025.”
- “Depreciation and amortization for the first quarter of fiscal 2026 increased $45 million, or 5.7%, to $841 million from $796 million for the first quarter of fiscal 2025.”
- “Online sales represented 16.5% of net sales during the first quarter of fiscal 2026 and increased by 10.5% compared to the first quarter of fiscal 2025.”
Key takeaways
- -The Home Depot, Inc. closed at $349 on June 26, 2026.
- -Trailing P/E is 24.78x and price-to-sales is 2.09x.
- -Model fair value is $298 with margin of safety at -14.50%.
- -Five-year revenue CAGR is 3.34% and five-year EPS CAGR is 3.56%.
- -Earnings yield is 4.04% and net margin is 8.41%.
Valuation snapshot
The market price, model anchor, growth support, and profitability facts behind the valuation read.
Executive Summary
Evaluating the current market position of The Home Depot, Inc. requires weighing its prevailing market price against its underlying operational metrics and historical growth trajectories. At the close of trading on June 26, 2026, the stock stood at $349, translating to a trailing earnings multiple of 24.78x. This market pricing sits above the TGMCharts fair-value model estimation of $298, which establishes a negative margin of safety of -14.50%.
This research insight analyzes whether the firm's long-term operational performance justifies its current valuation multiples. Rather than relying on a single financial ratio, this assessment connects the trailing price-to-earnings multiple, price-to-sales ratio, earnings yield, and historical growth rates. By examining these metrics in unison, we can better identify whether the market price reflects fundamental business expansion or an expansion of investor valuation multiples.
Price And Multiple Context
To establish a baseline for valuation, we first look at the price investors are paying relative to top-line and bottom-line achievements. The company's price-to-sales ratio is 2.09x, which represents the premium applied to gross revenue before accounting for operational efficiency. Concurrently, the trailing earnings yield stands at 4.04%, offering an alternative perspective on investor returns relative to the equity price.
Supporting exhibit 2
Exhibit: HD price history
The price chart shows whether the valuation question is being driven by recent share-price movement.
Latest close: $349 as of June 26, 2026.
HD Price Chart
The close at $349 is the market anchor for this note. The fair-value model sits at $298, so the price chart helps separate a business-quality question from a market-entry-price question.
Primary exhibit
Exhibit: HD P/E ratio history
The trailing earnings multiple is the main valuation exhibit because it connects the market price to reported earnings.
Latest P/E ratio: 24.78x as of June 26, 2026.
HD HD P/E ratio Chart
The trailing earnings multiple is the main valuation exhibit because it connects the market price to reported earnings.
A P/E ratio of 24.78x has to be judged against the company's five-year EPS CAGR of 3.56%. If the multiple is high while EPS support is ordinary, the valuation thesis becomes more dependent on investor confidence than on fresh earnings power.
Supporting exhibit 3
Exhibit: HD price-to-sales history
Price-to-sales gives a second valuation lens when margins and earnings can move around the cycle.
Latest price-to-sales ratio: 2.09x.
HD HD price-to-sales Chart
Price-to-sales gives a second valuation lens when margins and earnings can move around the cycle.
Price-to-sales at 2.09x is most useful beside net margin of 8.41%. A richer sales multiple is easier to defend when margin quality is durable rather than temporarily elevated.
Fair Value And Margin Of Safety
The TGMCharts quantitative model places the fair value of the business at $298. Comparing this intrinsic calculation to the market price of $349 reveals a margin of safety of -14.50%. This negative margin indicates that the stock is trading at a premium to its model-derived valuation, placing a higher burden of proof on future earnings expansion and operational efficiency to justify the current market entry point.
Valuation evidence table
A compact cross-check of price, model value, growth, and profitability support.
Counterpoint exhibit 4
Exhibit: HD earnings yield history
Earnings yield reframes valuation from an owner's-yield perspective rather than a multiple perspective.
Latest earnings yield: 4.04%.
HD HD earnings yield Chart
Earnings yield reframes valuation from an owner's-yield perspective rather than a multiple perspective.
The earnings yield of 4.04% is the counterweight to the P/E ratio. If the yield is thin relative to the quality and growth profile, the valuation case needs more help from future compounding.
Growth Support
Long-term compounding metrics provide a historical anchor for the firm's expansion capabilities. Over the past five years, the compound annual revenue growth rate reached 3.34%, demonstrating a steady upward trajectory in total sales volume. On a per-share basis, the five-year compound annual growth rate for earnings per share is 3.56%, indicating that historical profitability has expanded alongside top-line gains.
Supporting exhibit 5
Exhibit: HD revenue history
Revenue history tests whether the valuation is being supported by real business expansion.
Five-year revenue CAGR: 3.34%.
HD revenue
Revenue history tests whether the valuation is being supported by real business expansion.
Revenue growth is the business-expansion evidence behind the valuation read. A five-year revenue CAGR of 3.34% helps show how much of the valuation story is coming from company growth instead of only multiple expansion.
Supporting exhibit 6
Exhibit: HD EPS history
EPS history checks whether reported earnings are keeping pace with the market multiple.
Five-year EPS CAGR: 3.56%.
HD EPS
EPS history checks whether reported earnings are keeping pace with the market multiple.
A five-year EPS CAGR of 3.56% is the clearest support figure for a P/E-based conclusion. If EPS growth slows while the multiple remains elevated, the article should become more cautious after refresh.
Margin Quality
Operating efficiency determines how effectively top-line revenue translates into bottom-line returns for shareholders. The company's latest trailing net margin is 8.41%. When evaluated alongside the price-to-sales ratio of 2.09x, this profit margin helps determine whether the current sales multiple is backed by durable profitability or if the valuation remains vulnerable to potential margin compression.
Supporting exhibit 7
Exhibit: HD net margin history
Net margin shows whether the company has enough profitability quality to support its valuation.
Latest net margin: 8.41%.
HD net margin
Net margin shows whether the company has enough profitability quality to support its valuation.
Net margin of 8.41% is a quality signal, not a valuation verdict by itself. It matters because a premium multiple is more defensible when margins are structurally strong and less defensible when margins are peaking.
Bull/Bear Valuation Case
The optimistic perspective relies on the durability of the company's long-term financial trends. Proponents can point to the steady five-year revenue CAGR of 3.34% and the five-year EPS CAGR of 3.56% as evidence of a reliable operational engine, with a net margin of 8.41% demonstrating solid profitability. Conversely, the cautious perspective emphasizes that the market price of $349 exceeds the model fair value of $298, suggesting that a trailing P/E of 24.78x leaves little room for operational errors or macroeconomic headwinds.
Bull and bear case
Valuation support
- Five-year revenue CAGR of 3.34% and five-year EPS CAGR of 3.56% support the business case.
- Net margin of 8.41% is the quality check behind the multiple.
Valuation pressure
- A P/E ratio of 24.78x can become demanding if EPS growth slows.
- The model margin of safety at -14.50% should change the valuation read if it deteriorates after refresh.
What Would Change The View
This valuation framework is highly dependent on the stability of key financial inputs. A significant divergence in future quarterly earnings reports that alters the five-year EPS CAGR of 3.56% or a contraction in the net margin below 8.41% would necessitate a revision of the model. Furthermore, any notable shift in the market price toward the model-derived fair value of $298 would directly impact the margin of safety calculations.
Final Research Read
In summary, The Home Depot, Inc. presents a valuation that is elevated relative to its model-derived fair value of $298, trading at a trailing multiple of 24.78x. While historical growth metrics like the five-year revenue CAGR of 3.34% remain positive, the near-term trends in net income and free cash flow require close monitoring to ensure the premium multiple remains defensible. This analysis is built upon standardized, precomputed financial data and is intended for general research purposes rather than personalized financial guidance.
Research trail
Continue through the source pages behind this research note.
FAQ
Is HD fairly valued?
The Home Depot, Inc. trades at 24.78x trailing earnings with a model margin of safety of -14.50%. The cleanest read comes from comparing that valuation to five-year revenue CAGR of 3.34% and five-year EPS CAGR of 3.56%.
What valuation metric matters most for HD?
This article anchors on P/E, fair value, margin of safety, price-to-sales, earnings yield, revenue growth, and EPS growth. No single metric is treated as a recommendation.
How often should this HD valuation view refresh?
The article should refresh after the daily TGMCharts precompute job because the stored close, fair value, and claim ledger are dated to June 26, 2026.
Claim ledger
Every numeric or dated claim in this note was resolved from precomputed TGMCharts data before publishing.
Research snapshot
Extractable thesis
The Home Depot, Inc. does not get a one-metric verdict. The stock trades at 24.78x trailing earnings and the TGMCharts fair-value model is $298, so the valuation read depends on whether growth and margins support that price.
Data snapshot: 2026-06-26 / byline: TGMCharts Research / article status: published