Key Takeaways
- Home Depot stock rose 7% today as housing stocks rallied after Tuesday’s midterm elections, along with Lowe’s, D.R. Horton and Lennar.
- Investors are betting on new housing policy and lower mortgage rates, and neither has arrived.
- Analysts expect Home Depot’s normalized EPS to grow about 2% this fiscal year, and faster after that.
- Home Depot’s Nov. 17 third-quarter report is the next test, U.S. comparable sales above all.
Home Depot (HD) stock is up 7% today, as housing stocks rallied after Tuesday’s midterm elections and Treasury yields dipped.
Homebuilders jumped even more: D.R. Horton (DHI) rose 8% and Lennar (LEN) gained 7%. Home Depot’s closest rival, Lowe’s (LOW), climbed 8%.
Washington still has to deliver
Democrats swept Congress, raising hopes for new action on housing affordability and for lower mortgage rates.
TD Cowen wrote in a post-election note that Rep. Maxine Waters, who could chair the House Financial Services Committee, plans to focus on housing, including down payment help. But its analysts “remain dubious it will become law.”
So investors are buying the hope of a bill that may never pass.
Home Depot needs homes to sell
Home Depot’s comparable sales rose just 0.3% in fiscal 2025, the year ended Feb. 1, 2026, after two years of declines. Management says it starts to leverage its costs at comps of about 3%, and it guides flat to 2% this year.
Analysts expect normalized EPS to grow about 2% this fiscal year, which ends in January, and faster after that:
I wouldn’t expect an election to move those estimates. More home sales would.
Before today’s jump, Home Depot traded at 22x forward earnings, right at its five-year average:
At today’s price, it’s about 24x, a premium for earnings that have slipped two years running.
TIKR tracks 36 analysts on Home Depot. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Home Depot, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Home Depot’s Analyst Ratings
The rest of housing is waiting too
Lowe’s is in the same spot. Its comparable sales rose just 0.2% in the quarter ended July 31 as do-it-yourself customers pulled back, and it now guides to flat comps for the year. Its report, the same week as Home Depot’s, will show whether those homeowners are spending again.
The builders have it worse. D.R. Horton’s net sales orders fell 7% in its quarter ended Sept. 30, and Executive Chairman David Auld said, “We expect incentives to remain elevated in fiscal 2027.” Lennar’s average sales price in the quarter ended Aug. 31 reflected about 12.0% in incentives, and its gross margin on home sales fell to 15.8% from 17.5% a year earlier. Lower yields would let both spend less on incentives, and Lennar reports in mid-December.
Wait for the comps
On Nov. 17, watch Home Depot’s U.S. comparable sales against the second quarter’s 1.3%, when comparable transactions fell 1.0%.
Frankly, I’d wait for that report. If Congress does pass down payment help and rates keep easing, transactions should turn first, and estimates would follow.
So what is Home Depot stock actually worth?
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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!
