Key Stats for Home Depot Stock
- Current Price: $285.77
- Target Price (Mid): ~$440
- Street Target: ~$378
- Potential Total Return: ~54%
- Annualized IRR: ~10% / year
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What Happened?
The Home Depot (HD) picked up a new Buy rating on October 6, 2026, when Melius Research initiated coverage with a $397 price target. The call arrived with the 30-year mortgage rate at 7.28% as of October 1, its highest Freddie Mac reading since November 2023. Shares rose 1.97% to $286.69 that day and closed at $285.77 on October 7, about 3% above TIKR’s 52-week low of $277.15. The company’s investor relations materials show fiscal 2026 guidance reaffirmed at flat to 2% comparable sales growth. Its CFO says the demand turn Melius expects has not started.
Melius Is Buying a Turn Management Cannot See Yet
Melius rated both home centers, Home Depot and Lowe’s (LOW), at Buy while turning negative on most homebuilders. Its analysts called existing-home supply’s rise “perhaps the most consequential trend for the housing ecosystem.” They expect that trend to continue for at least two to three years and drive a “tipping point-like positive inflection” in existing home sales and repair and remodel demand. The $397 target sits above the Street mean of about $378, and TIKR counts 18 Buys, 4 Outperforms, and 14 Holds.
Management is not calling that turn. “We don’t see anything that tells us there’s an inflection,” Richard McPhail, Executive Vice President and CFO, said on September 15. McPhail has also overseen the Pro subsidiaries since CEO Ted Decker began a temporary medical leave in August, which the company said it expected to last a few months.
The market has sided with McPhail. Home Depot’s NTM P/E fell from about 25x on February 1 to about 19x on October 7. Over that stretch the share price dropped 23.71%, while NTM EPS estimates rose 2.33%, from $15.05 to $15.40. Investors now price Home Depot closer to Lowe’s, at about 15x, than to TJX Companies (TJX) at about 26x.
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The Margin Defense Holds at the Gross Line
At the Goldman Sachs Global Consumer and Retail Conference, McPhail said “there’s a misunderstanding on Pro margin.” SRS and GMS sell categories with margins below the company average, he said, but similar to what Home Depot earns on those same categories. Pro customers, he added, carry the same margin profile as consumers. He allowed that “you might see some product mix impacts from time to time.”
TIKR data is consistent with that at the gross line. Gross margin was 33.38% in fiscal 2023 and 33.32% in fiscal 2025. Consensus sits near 33.1% for fiscal 2026, matching company guidance that includes IEEPA tariff refunds. EBIT margin slid from 14.2% to 13.1% over the same years, so the pressure sits in operating costs. McPhail cited “several billion dollars of productivity in our expense base over the next few years,” but added, “We intend to see that productivity in the form of higher sales.” That makes it a share-gain plan more than a margin one.
Cash lags too. Operating cash flow missed consensus in each of the last five quarters on TIKR’s Beats & Misses page. Fiscal Q2 free cash flow of $4.51 billion came in 14.11% below estimates, though it grew 21.04% from a year earlier. Trade credit for Pros, part of the service model McPhail described, is one likely drag, since it books sales as receivables before the cash arrives.
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TIKR Advanced Model Analysis
- Current Price: $285.77
- Target Price (Mid): ~$440
- Potential Total Return: ~54%
- Annualized IRR: ~10% / year
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The mid case reaches around $440 by January 31, 2031, a ~54% total return, or ~10% a year. TIKR’s consensus normalized EPS for the fiscal year ending January 2031 is about $20, so the target works out to about 22x those earnings. That is above the 20.00x trailing P/E on October 7. Consensus expects EPS growth near 2% for the fiscal year ending January 2027, then about 6% and 9% in the two years after. The primary risk is the multiple: on a forward basis it fell from about 25x to about 19x since February, and the target needs it to recover. Upside comes if rising resale supply lifts remodeling before then.
Conclusion
Home Depot is expected to report fiscal Q3 around November 17, a date it has not confirmed. Consensus sits near $42.7 billion in sales and around $3.84 in adjusted EPS. Operating cash flow that meets estimates would back McPhail’s margin case. A sixth straight miss could put the $277.15 low back in play.
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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 stocks mentioned. Thank you for reading, and happy investing!
