HD
The Home Depot, Inc.$379.04
Sell
Target $325.18
Report: Mar 07, 2026Consumer Cyclical • Home Improvement • Mature CompounderSnapshot
Decision-first overview with recommendation, valuation anchor, and current setup.
Company Overview
Research Snapshot
Price History
Pelican View
Current$379.04-14.2%
Rec: SellConviction: High
Entry Target
N/A
N/A
Fair Value
$325.18
(14% below current)
Stop Loss
N/A
N/A
Position Size
None
Time Horizon
N/A
Key Metrics
Live Snapshot
Market Data
52 Week High$426.75
52 Week Low$320.26
Avg. 3 Month Volume4.26M
Efficiency
LTM Gross Margin33.3%
LTM EBITDA Margin15.2%
LTM EBIT Margin12.7%
LTM Operating Margin12.7%
LTM ROA13.8%
LTM ROE130.0%
LTM ROIC20.6%
LTM ROCE29.9%
Capital Structure
Market Cap (MM)$327.6B
Enterprise Value (MM)$391.5B
Shares Outstanding996.00M
Total Debt (MM)$65.35B
Cash & Equivalents (MM)$1.39B
LTM Net Debt (MM)$63.96B
LTM Net Debt/EBITDA2.6x
Growth
TTM Rev. Growth3.2%
Last 3-Yr Rev. CAGR1.5%
Last 3-Yr EBITDA CAGR-2.5%
Last 3-Yr EPS CAGR-5.2%
Valuation
Street Target Price$408.08
LTM EV/Revenue2.4x
LTM EV/Gross Profit7.1x
LTM EV/EBIT18.7x
LTM EV/EBITDA15.7x
LTM P/E23.1x
LTM EV/FCF31.0x
LTM P/FCF25.9x
LTM P/TB4.5x
LTM P/B25.6x
Dividend Yield2.8%
Payout Ratio64.7%
Executive SummarySituation: Current price is $379.04 versus fair value $325.18 (-14.2% expected return), and valuation confidence is stable. Debate: Bull case depends on SRS and GMS Integration Milestones Successful cross-selling and synergy realization would validate the expensive M&A strategy and potentially reverse the ROIC decline. Bear case centers on Permanent Moat Erosion Technological disruption or a new low-cost competitor could permanently impair the company's pricing power and return on capital. Conclusion: Recommendation is Sell with no position, pending a materially better risk/reward setup.
Bull Case
The integrated SRS-GMS distribution network captures high-frequency professional spend that is less cyclical than DIY. AI-driven project management tools and the Pro Xtra loyalty program create deep switching costs for contractors.
Bear Case
Extreme leverage (Debt/Equity > 500%) and negative tangible book value create significant balance sheet risk. Margin compression from the GMS acquisition mix and rising SG&A are eroding profitability, with incremental ROIC currently at -32.8%.
Key Catalysts
Mid-Term (6-18 months)Impact: High
SRS and GMS Integration Milestones Successful cross-selling and synergy realization would validate the expensive M&A strategy and potentiall...
Long-Term (18+ months)Impact: Moderate
Resumption of Share Repurchases A return to the buyback-heavy model would signal that the company has successfully deleveraged and normalize...
Long-Term (18+ months)Impact: Moderate
Home Depot is at a critical juncture as it laps the 53rd week of FY2025 and integrates its largest acquisitions to date amid a historically...
Primary Risks
Concern: Medium
Permanent Moat Erosion Technological disruption or a new low-cost competitor could permanently impair the company's pricing power and return...
Concern: High
Balance Sheet Insolvency Risk Extreme leverage (Debt/Equity > 500%) and negative tangible book value leave the company vulnerable to a prolo...
Concern: Medium
The stewardship verdict is 'Adequate' but requires close monitoring. The board is highly independent and includes seasoned capital allocator...
Recent Activity
2025-11-18SEC Filing (8-K)
-6.02%Home Depot reported Q3 fiscal 2025 results with 2.8% sales increase and updated guidance
2023-11-14SEC Filing (8-K)
+5.40%Home Depot reported Q3 fiscal 2023 results with 3.0% sales decline and narrowed guidance
2022-09-13Market Movement
-6.59%Market/Sector Move -6.59%
2022-05-18Market Movement
-5.24%Market/Sector Move -5.24%
2021-11-16SEC Filing (8-K)
+5.73%Home Depot reported Q3 fiscal 2021 results with 9.8% sales increase and 23.3% EPS growth
Valuation Table
9.8/10Decision Grade
Scenario Range
$233
Bear
$384
Bull
$379