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The Home Depot Inc. (HD) Stock

The Home Depot Inc. Stock Details, Movements and Public Alerts

The Home Depot Investment Analysis: Building Wealth Through America's Home Improvement Leader

As America's housing stock ages and professional contractors drive growth, Home Depot leverages its scale, technology, and Pro loyalty programs to dominate the home improvement sector. With 15 consecutive years of dividend increases and market-leading margins, HD offers investors exposure to both housing cycles and secular renovation trends.

  • Pro Customer Dominance:Professional contractors represent ~50% of sales with higher margins and loyalty
  • Digital Integration:Interconnected commerce strategy drives 10%+ digital sales penetration
  • Supply Chain Moat:Industry-leading distribution network creates cost advantages competitors can't match
  • Consistent Outperformance:Superior returns vs. Lowe's through operational excellence
  • Shareholder Returns:15-year dividend growth streak with aggressive share buybacks

52-Week High

$431.63

-14.28% from high

52-Week Low

$324.29

+14.10% from low

Avg Daily Volume

55

Fundamentals

Valuation Metrics

P/E Ratio (TTM)

25.07

Above market average

Forward P/E

24.63

Earnings expected to grow

PEG Ratio

4.32

Potentially overvalued

Price to Book

46.12

EV/EBITDA

16.63

EPS (TTM)

$14.71

Price to Sales

2.25

Beta

1.02

Similar volatility to market

How is HD valued relative to its earnings and growth?
The Home Depot Inc. trades at a P/E ratio of 25.07, which is above the market average of approximately 20. This premium valuation suggests investors expect above-average growth or the company has competitive advantages justifying the higher multiple. Looking ahead, the forward P/E of 24.63 is lower than the current P/E, indicating analysts expect earnings to grow over the next year. The PEG ratio of 4.32 indicates a premium valuation even accounting for growth.
What is HD's risk profile compared to the market?
With a beta of 1.02, The Home Depot Inc. is roughly as volatile as the market, moving in line with broad market trends. This moderate beta suggests the stock offers market-level returns without excessive volatility. The price-to-book ratio of 46.12 shows investors value the company above its book value, which often reflects intangible assets or growth prospects.

Performance & Growth

Profit Margin

8.98%

Operating Margin

12.90%

Return on Equity

299.50%

Return on Assets

15.10%

Revenue Growth (YoY)

9.40%

Earnings Growth (YoY)

-5.00%

How profitable and efficient is HD's business model?
The Home Depot Inc. achieves a profit margin of 8.98%, meaning it retains $8.98 from every $100 in revenue after all expenses. This represents a solid margin typical of well-run businesses, showing the company can effectively balance revenue generation with cost control. The operating margin of 12.90% reveals how efficiently the company runs its core business operations before interest and taxes. With ROE at 299.50% and ROA at 15.10%, the company generates strong returns on invested capital.
What are HD's recent growth trends?
The Home Depot Inc.'s revenue grew by 9.40% year-over-year, showing steady progress in growing the business. This positive trajectory indicates the company maintains competitive positioning in its markets. Earnings decreased by 5.00% year-over-year, reflecting the bottom-line impact of business performance. These growth metrics should be evaluated against RETAIL-LUMBER & OTHER BUILDING MATERIALS DEALERS industry averages for proper context.

Dividend Information

Dividend Per Share

$6.80

Dividend Yield

2.49%

Ex-Dividend Date

6/5/2025

Dividend Date

6/18/2025

What dividend income can investors expect from HD?
The Home Depot Inc. offers a dividend yield of 2.49%, paying $6.80 per share annually. This above-average yield of 2-4% provides meaningful income while still allowing the company to reinvest for growth. It compares favorably to the S&P 500 average and offers competitive returns versus bonds in the current rate environment. To receive the next dividend, shares must be purchased before the ex-dividend date of 6/5/2025.
How reliable is HD's dividend for long-term investors?
The dividend sustainability can be assessed through the payout ratio - The Home Depot Inc. pays $6.80 per share in dividends against earnings of $14.71 per share, resulting in a payout ratio of 46.23%. This balanced payout between 30-60% suggests a sustainable dividend policy that allows both shareholder returns and business reinvestment. The dividend appears well-covered by earnings. The next dividend payment is scheduled for 6/18/2025.

Company Size & Market

Market Cap

$366.87B

Shares Outstanding

994.93M

Book Value/Share

$8.00

Asset Type

Common Stock

What is HD's market capitalization and position?
The Home Depot Inc. has a market capitalization of $366.87B, classifying it as a mega-cap stock (over $200B). These are the largest, most established companies globally, typically offering stability and liquidity but with more modest growth potential. Mega-caps often pay dividends and weather economic downturns better than smaller companies. With 994.93M shares outstanding, the company's ownership is relatively concentrated. As a major player in the RETAIL-LUMBER & OTHER BUILDING MATERIALS DEALERS industry, it competes with other firms in this sector.
How does HD's price compare to its book value?
The Home Depot Inc.'s book value per share is $8.00, while the current stock price is $370.00, resulting in a price-to-book (P/B) ratio of 46.25. This high P/B ratio indicates significant intangible assets, strong brand value, or high growth expectations. Technology and consumer brand companies often trade at elevated P/B ratios due to intellectual property and competitive advantages not reflected on the balance sheet. As a common stock, this represents equity ownership with voting rights.

Analyst Ratings

Analyst Target Price

$418.64

13.15% upside potential

Analyst Recommendations

Strong Buy

5

Buy

21

Hold

12

Sell

0

Strong Sell

1

How reliable are analyst predictions for HD?
39 analysts cover HD with 67% recommending buy/strong buy ratings. Analyst predictions have mixed reliability - studies show consensus rarely beats market returns consistently. The mixed views reflect uncertainty about the outlook. The consensus target of $418.64 implies 13.1% upside, but targets are often adjusted to follow price moves rather than predict them.
What is the Wall Street consensus on HD?
Current analyst recommendations:5 Strong Buy, 21 Buy, 12 Hold, 01 Strong Sell. The bullish tilt suggests optimism about future prospects, though investors should conduct independent research.Remember that analyst opinions often lag price movements and can be influenced by investment banking relationships.

Fundamentals last updated: Jul 1, 2025, 02:53 AM

Technical Indicators

RSI (14-day)

55.86

Neutral

50-Day Moving Average

$362.25

2.14% above MA-50

200-Day Moving Average

$384.87

-3.86% below MA-200

MACD Line

1.84

MACD Signal

2.38

MACD Histogram

-0.54

Bearish

What does HD's RSI value tell investors?
The RSI (Relative Strength Index) for HD is currently 55.86, indicating the stock is in neutral territory (40-60 range). Neither buyers nor sellers have clear control, suggesting consolidation or balanced market forces. Combined with the price being above the 50-day moving average, this confirms bullish conditions.
How should traders interpret HD's MACD and moving average crossovers?
MACD analysis shows the MACD line at 1.84 below the signal line at 2.38, with histogram at -0.54. This bearish crossover indicates downward pressure. The 50-day MA ($362.25) is below the 200-day MA ($384.87), forming a death cross pattern that often warns of extended weakness. Price is currently between the MAs, suggesting transition.

Indicators last updated: Jun 4, 2025, 07:03 AM

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Home Depot (HD) Stock Analysis 2025: Complete Investment Guide

As America's housing stock ages and professional contractors drive growth, Home Depot leverages its scale, technology, and Pro loyalty programs to dominate the home improvement sector. With 15 consecutive years of dividend increases and market-leading margins, HD offers investors exposure to both housing cycles and secular renovation trends.

When Ted Decker took the helm as CEO in 2022, the 22-year Home Depot veteran brought a laser focus on professional customers that's reshaping America's largest home improvement retailer. "The Pro customer is the backbone of our business," Decker emphasized during his first earnings call, outlining an ambitious strategy to capture an even larger share of the $450 billion professional market. This Pro-centric approach, combined with Home Depot's unmatched scale and supply chain advantages, positions the company to thrive regardless of housing market cycles.

Financial Performance Analysis

Revenue and Growth Metrics

Home Depot's financial performance showcases the power of scale in retail. With annual revenue exceeding $155 billion, the company generates nearly 50% more sales than its closest competitor, Lowe's. This scale advantage translates directly to the bottom line through superior purchasing power, more efficient marketing spend, and optimized logistics.

The company's comp store sales growth has consistently outpaced the industry, driven by Pro sales growth (professional customers shop 10x more frequently than DIY customers), digital penetration (online sales now exceed 10% of total revenue), and ticket growth through product mix optimization.

Profitability and Margins

Home Depot's operational excellence shines through in its industry-leading margins: gross margin of ~33% reflecting pricing power and private label penetration, operating margin of ~15% best-in-class among big-box retailers, and return on invested capital consistently above 35%, demonstrating efficient capital allocation.

The company's ability to maintain these margins during inflationary periods highlights its pricing power and operational efficiency. Private label brands like Husky tools and Hampton Bay lighting contribute approximately 10% of sales at significantly higher margins than national brands.

Cash Flow Generation

Home Depot's cash generation machine funds both growth investments and shareholder returns: operating cash flow of $16+ billion annually, free cash flow of $12+ billion after capital expenditures, and balanced capital allocation between dividends (35%), buybacks (50%), and growth investments (15%).

Valuation Analysis

At a PE ratio of approximately 24x, Home Depot trades at a premium to the broader market but in line with historical averages for quality retailers. The stock has historically traded between 15-30x earnings, with lower multiples during housing downturns and higher multiples during expansion phases. Current valuation sits near the midpoint, suggesting balanced risk/reward.

Compared to Lowe's (PE ~15x), Home Depot commands a 60% valuation premium justified by superior same-store sales growth, higher margins and returns on capital, stronger Pro customer relationships, and better digital integration.

Growth Catalysts

1. Professional Customer Expansion

The Pro segment represents Home Depot's most significant growth opportunity. Professional customers generate approximately $77 billion in annual sales, accounting for nearly 50% of total revenue despite representing only 5% of customers. The Pro Xtra loyalty program, with over 2 million members, creates sticky relationships through volume pricing, dedicated services, credit solutions, and tool rental.

Management targets growing Pro sales to 55% of total revenue by leveraging technology investments like the Pro app, which enables job site delivery scheduling and real-time inventory visibility.

2. Digital Integration and Interconnected Commerce

Home Depot's interconnected commerce strategy seamlessly blends online and offline experiences. Digital investments totaling $11 billion over the past five years have created competitive advantages: Buy Online Pick Up In Store (50%+ of online orders), same-day and next-day delivery covering 90% of US population, augmented reality visualization tools, and real-time inventory visibility across channels.

Digital sales productivity continues improving, with online generating $15+ billion annually at higher margins due to reduced labor costs and attachment rates for installation services.

3. Supply Chain and Distribution Moat

Home Depot's supply chain represents an insurmountable competitive advantage. The company operates 100+ distribution centers optimizing product flow, flatbed distribution centers for dedicated Pro customer fulfillment, market delivery operations for last-mile capabilities, and direct fulfillment centers for e-commerce specific operations.

This infrastructure enables industry-leading in-stock rates above 98%, same-day delivery for Pro customers, and cost advantages through scale that regional competitors cannot match. The $1.2 billion annual supply chain investment continues widening the moat.

Risk Assessment

Market and Economic Risks

  • Housing market cycles directly impact sales and profitability
  • Interest rate sensitivity affects both housing turnover and renovation spending
  • Lumber and commodity price volatility can pressure margins
  • DIY customer weakness during economic uncertainty

Competitive Landscape

  • Lowe's continues investing aggressively in Pro customer initiatives
  • Amazon expanding into home improvement categories
  • Regional players like Menards compete effectively in local markets
  • Specialty retailers capturing share in specific categories

Operational Challenges

  • Labor availability and wage inflation in tight job market
  • Inventory management complexity with 35,000+ SKUs
  • Technology integration risks with legacy systems
  • Shrink and theft pressures in urban locations

Investor Suitability

Perfect For

  • Dividend growth investors seeking reliable income and appreciation
  • Long-term holders wanting exposure to housing and renovation trends
  • Quality-focused investors prioritizing market leaders with moats
  • Cyclical investors who can time housing market cycles

Less Suitable For

  • Growth investors seeking explosive returns
  • Risk-averse investors uncomfortable with housing cycle exposure
  • Short-term traders given low volatility and steady performance
  • Value hunters looking for deep discounts

Investment Approach and Timing

Home Depot stock follows predictable patterns tied to housing market cycles and seasonal trends. The optimal entry points typically emerge during housing market pessimism, rising interest rate fears, and the November-February seasonal weakness period. Investors should monitor housing starts, existing home sales, and the NAHB builder sentiment index as leading indicators.

For long-term investors, dollar-cost averaging during housing downturns has historically generated superior returns. The company's consistent execution and shareholder-friendly capital allocation provide confidence to buy weakness. Consider accumulating shares when the PE ratio drops below 20x, indicating market pessimism about near-term growth.

The Investment Verdict

Home Depot represents a best-in-class operator in an essential industry with secular tailwinds. While housing cycles create volatility, the company's Pro customer focus, supply chain advantages, and digital transformation position it to gain share regardless of market conditions. CEO Ted Decker's strategic vision builds upon decades of operational excellence that consistently delivers market-beating returns.

For patient investors willing to weather housing cycles, Home Depot offers an attractive combination of growth, income, and defensive characteristics. The stock won't shoot the lights out during bull markets, but it won't crater during downturns either. This Goldilocks profile, combined with a 15-year dividend growth streak and aggressive buybacks, makes HD a core holding for balanced portfolios.

  • 2025 Price Target: $400-450 (+15-30% upside)
  • Risk Level: Medium (housing cycle exposure balanced by quality)
  • Recommendation: Accumulate on housing pessimism, hold for full cycle

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