Home Depot Is Down 21% From Its High. The Housing Market Is Frozen. Is Now the Time to Buy?

Key Stats for Home Depot Stock

• 52-Week Range: $289.10 to $426.75
• Street Mean Target: ~$377
• TIKR Model Target (Mid): ~$471
• Market Cap: ~$309.7 billion
• LTM Gross Margin: 32.8%
• NTM P/E: ~20x
• Dividend Yield: 3.1%
• Fwd 2-Yr EPS CAGR: ~4%

Value your favorite stocks like Home Depot with 5 years of analysts’ forecasts using TIKR’s new Valuation Model (It’s free) >>>

Home Depot Just Posted Its Strongest Comp Sales in Four Years. The Stock Is Still Down 21% From Its High.

Home Depot (HD) is the world’s largest home improvement retailer, operating roughly 2,300 stores across North America where homeowners and professional contractors buy everything needed to build, maintain, and renovate properties. What makes the stock interesting right now is the gap between what the business just reported and where shares are trading.

CFO Richard McPhail described the operating environment on the Q2 earnings call as “frozen housing market conditions,” a phrase that captures why the stock has been under pressure all year, even as the underlying business has held up better than most expected.

In Q2 fiscal 2026, revenue reached $47.86 billion, up 5.7% year over year and ahead of Wall Street’s $47.27 billion estimate.

Comparable store sales rose 1.7%, the strongest result since Q3 fiscal 2022, with U.S. comp sales up 1.3%. Adjusted EPS came in at $4.92, well ahead of the $4.73 consensus.

Thirteen of sixteen merchandise categories posted positive comp sales growth, and ticket sizes above $1,000 grew 2.4% year over year. Management reaffirmed full-year guidance for total sales growth of 2.5% to 4.5% and comparable sales of flat to up 2%.

The drawdown chart shows how persistent the selling pressure has been. HD hit a max drawdown of nearly 24% in mid-May before recovering partially through summer, then resumed its decline, sitting about 21% below the 52-week high as of this writing. The stock started 2026 near $426 and has drifted lower as investors waited for a housing catalyst that has not arrived.

Existing home sales have been running near multi-decade lows for four consecutive years as homeowners locked into sub-3% mortgages refuse to sell, suppressing the turnover that drives the large renovation projects where Home Depot earns its best margins.

See historical and forward estimates for Home Depot stock (It’s free!) >>>

The Cash Machine Keeps Running Even When Housing Is Stuck

Home Depot generates substantial free cash flow even in a difficult housing environment, and the chart below makes that case across six fiscal years. Annual FCF ranged from a low of $11.5 billion in fiscal 2023, when the company was absorbing capital expenditures from the SRS Distribution acquisition, to a peak of nearly $18 billion in fiscal 2024.

The most recent fiscal year came in at $12.65 billion, down from the prior year, reflecting ongoing SRS integration costs and reduced housing turnover that pressured operating cash.

Even at that level, $12.6 billion in annual free cash flow on a $310 billion market cap represents a roughly 4% FCF yield before any housing recovery. That cash funds a 3.1% dividend yield, ongoing buybacks, and continued investment in the professional contractor ecosystem.

The SRS Distribution business, acquired to expand HD’s reach into the fragmented building products distribution market, is contributing meaningfully to revenue and is expected to become more margin-accretive as integration matures.

See how Home Depot performs against its peers in TIKR (It’s free!) >>>

What Does the Valuation Model Say?

The TIKR valuation model applies roughly 3.5% annual revenue growth through fiscal 2031 with net income margins near 9.5%, arriving at a mid-case target of around $471 per share, implying roughly 52% total return at an annualized IRR of around 10% per year.

Those assumptions are deliberately conservative, 3.5% revenue growth sits below the company’s own guidance midpoint, and the margin assumption is modestly below recent actuals.

The Street’s mean target of around $377 implies roughly 21% upside on a nearer-term basis, reflecting more optimism around a housing recovery. Both frames are reasonable and differ mainly in timing.

Should You Buy Home Depot Stock?

The bull case rests on housing normalizing. Mortgage rates have begun easing from their peaks, and the backlog of deferred projects, kitchen remodels, bathroom renovations, and additions that homeowners have postponed for years represents genuine pent-up demand.

When turnover returns, Home Depot is positioned to capture a disproportionate share given its scale, professional contractor relationships, and the SRS platform. At 20 times forward earnings with a 3.1% dividend yield, the stock is not expensive for a business of this quality.

The bear case is that housing stays frozen longer than expected. Rates have been “about to come down” for two years, and each false start has extended the period of suppressed large-ticket spending.

CEO Ted Decker’s temporary medical leave adds management uncertainty, though McPhail and EVP Ann-Marie Campbell ran operations smoothly through a strong quarter. Forward revenue and EPS growth of roughly 4% annually leaves little room for multiple expansion if the housing recovery takes another year or two.

Home Depot is a dominant franchise trading well below its recent highs because the macro has not cooperated. The cash generation, market position, and long-term demand for home improvement are all intact. Investors willing to be patient on housing timing will find the current price considerably more compelling than it was at $426.

See analysts’ growth forecasts and price targets for Home Depot stock (It’s free!) >>>

Looking for New Opportunities?

• See which stocks billionaire investors are buying to follow the smart money.
• Analyze stocks in as little as 5 minutes with TIKR’s all-in-one, easy-to-use platform.
• The more rocks you overturn… the more opportunities you’ll uncover. Search 100K+ global stocks, global top investor holdings, and more with TIKR.

Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!