Housing turnover stays frozen at 7% mortgages, so Home Depot grows only with ticket and Pro mix. The stock at 20 times trailing earnings already assumes that, leaving little 12-month upside.
Key points
- $286 trades at 20 times trailing GAAP EPS of $14.29, with a 3.25% dividend yield.
- 1.7% comparable sales in Q2 were ticket-led; transactions fell 1.0% as large projects stayed deferred.
- 7.28% 30-year mortgage and 3.98 million existing-home sales keep turnover at decades-low levels.
The call
The price requires about 3% sales growth, a 12.5% operating margin, and a 20-times earnings multiple to hold near $286. That matches the company’s own fiscal 2026 guide of 2.5% to 4.5% sales and flat-to-4% EPS.
I expect the same: small-project and Pro demand offset frozen remodeling, tariff refunds reverse, and the multiple stays near 20 times. My 12-month target is $305, about even with the market after the dividend.
Revenue and free cash flow ($ billions)- Revenue
- Free cash flow
- My FCF
SEC filings through Q2 FY26; my forecasts marked E
Valuation
| Item | Figure |
|---|
| FY26E sales | $170 billion |
| FY26E GAAP EPS | $14.50 |
| NTM EPS to Oct 2027 | $14.90 |
| Multiple | 20.5 times |
| 12-month target | $305 |
A 20-times multiple fits a high-return retailer with mid-single-digit growth and 5% free-cash-flow yield. Asymmetry is modest: 7% upside if housing inflects, 10% downside if traffic keeps falling. That is a hold, not a buy.
Comparable sales mix in Q2 FY26Company Q2 FY26 results, August 18 2026
Risks
- Mortgage rates stay above 7% and existing-home sales stay near 4 million, cutting ticket growth.
- Acquisition mix and input costs keep gross margin below the 33.1% guide after refunds fade.
- CEO leave extends and Pro cross-sell of $400 million fails to materialize.
What would change my mind
A sustained drop in 30-year mortgage rates below 6% with existing-home sales above 4.5 million would lift the multiple and the target.