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Signal Ledger valuation · HD

Home Depot, Inc.

What the shares are worth today on our research (cited consensus, company plans and peers, since management sets no usable targets): every line valued at the end of FY2030, net debt rolled forward, then discounted back to Aug 2, 2026.

Signal Ledger valuation$259.35−21% vs $327.73
Business value at FY2030
$338B
FY2030 revenue
$191B
FY2030 EPS · P/E
$18.20 · 17×
Discount rate (WACC · equity)
8.09% · 8.84%

How this is built. No dated FY2030 sales promise: use cited company-ending-year consensus and a mid-cycle consensus margin, with current FY2026 guidance; recovery case timing is not asserted. Each input below shows its basis: consensus, company plan, peer or rule.

Researched Oct 23, 2026 from SEC filing 0001628280-26-058715 · price $327.73 at research time · Valuation methodology

Latest quarter in this research: Q2 FY2026

Reported Aug 18, 2026 for the quarter to Aug 2, 2026 (company release ↗). This valuation already reflects these results (researched Oct 23, 2026).

Revenue$47.9B
Operating income$6.84B14.3% margin
Net income$4.77B
Diluted EPS$4.79
SegmentRevenuevs a year agoOperating incomeMargin
Primary$42.8B+2%$6.59B15.4%
SRS / Other$5.05B+62%$0.25B4.9%
  • Total sales+5.7%, comparable sales+1.7%; Primary 1.5% growth and SRS acquisition contributions have different drivers.
  • GAAP operating margin 14.3%, adjusted 14.7%; full-year GAAP guide 12.4-12.6%.
  • FY2026 capexguide 2.5% and tax 24.3% reaffirmed.
  • SRS/Other contains four nonreportable verticals, including GMS; no extra GMS line double-counted.

What each business is worth

BusinessModelFY2030 revenueValue todayPer share2030 multipleValue from beyond FY2030
Primary retailMargin$173B$302B$302.6713.2× EBIT66%
SRS specialty distribution / OtherMargin$18B$7.6B$7.6113.7× EBIT67%
All businesses$191B$310B$310.28

From 2030 back to today

  1. Enterprise value at end of FY2030$338B
  2. Less net debt at FY2030$28B
  3. Equity value at FY2030$309B
  4. ÷ (1 + 8.84%)^3.5 years at the cost of equity$230B
  5. + dividends paid on the way, discounted$28B

This reconciliation checks the published Signal Ledger valuation against the net-debt path. The difference is 0.3%, inside our 5% tolerance.

From businesses to one share

  1. All businesses, valued today$310B
  2. − borrowings$50B
  3. − finance leases$3.1B
  4. + cash and short-term investments$2.1B
  5. ÷ diluted shares0.998B
  6. Signal Ledger valuation$259.35

Year by year to FY2030

Fiscal yearRevenueEBITDACapexFree cash flowNet debt at year end
FY2027$170B$25B$4.3B$15B$49B
FY2028$177B$26B$4.4B$16B$43B
FY2029$184B$28B$4.6B$18B$36B
FY2030$191B$30B$4.8B$19B$28B

What must be true

  • Primary retail grows revenue from $154.3B in FY2027 to $173.2B in FY2030 (1.1×).
  • SRS specialty distribution / Other grows revenue from $16.1B in FY2027 to $18.1B in FY2030 (1.1×).
  • Primary retail raises its EBIT margin from 13.5% to 14.5%.
  • SRS specialty distribution / Other raises its EBIT margin from 2.5% to 3.4%.
  • The company spends $18.1B of capital expenditure through FY2030.
  • Net debt peaks at $50.8B in FY2026 and stays financeable.

What the price implies

To reach $327.73 at our discount rate, Home Depot, Inc. would need about $236.8B of FY2030 sales (growth of about 9.5% a year from FY2026) with 13.4% GAAP EBIT margin — versus $191.3B and 13.4% GAAP EBIT margin in our research.

At the research price of $327.73 (2026-10-23), the price asks more than our assumptions overall. These are operating requirements at that price, not additional valuations or forecasts.

If sales and margins changed together

Each row matches the same research price at our unchanged discount rate, by scaling every operating line's margin by one common factor. Sales cover margin and capacity lines only; other valuation lines stay fixed. Margins are revenue-weighted within each metric, before separately modeled corporate costs and eliminations. The conclusion uses the row at our research margins when sales alone can match the price, otherwise the solved row needing the least sales growth; this is a trade-off between growth and profitability, not a forecast.

FY2030 sales factorFY2030 salesFY2026–30 CAGRRequired FY2030 marginRequirement
1.24×At research margins$236.8B9.5%
13.4% GAAP EBIT
Within margin guardrails
1.50×$286.9B14.9%
11.3% GAAP EBIT
Within margin guardrails
2.00×$382.5B23.5%
8.7% GAAP EBIT
Within margin guardrails
3.00×$573.8B36.6%
6.0% GAAP EBIT
Within margin guardrails

CAGR uses $164.7B of same-scope FY2026 sales from the published model or its sourced research base, over four fiscal years. “Within margin guardrails” checks numeric limits only, not commercial plausibility. Each line and year must stay at or below 50.0% GAAP EBIT and 100% EBITDA, or our research margin where that is higher; capacity EBIT uses the engine's equipment depreciation. Unsolved margins are not extrapolated.

Implied discount rate
7.0%

The WACC that makes model value equal the price, shifting WACC and cost of equity by the same amount. Model: 8.1% WACC · 8.8% cost of equity.

All-business FY2030 sales factor
1.24×

FY2030 revenue would need to reach $236.8B (model: $191.3B) across the margin and capacity businesses. FY1 stays fixed; the sales change ramps to FY2030 and stays at that factor thereafter.

If only one business changed

Businesses with margin or capacity revenue paths, ordered by value today. Revenue and margin are separate alternatives; these requirements are not added together.

Primary retail

Revenue alone
FY2030 revenue would need to reach $213.3B (model: $173.2B).
Margin alone

FY2030 EBIT margin would need to reach 17.6% (model: 14.5%).

SRS specialty distribution / Other

Revenue alone
This business alone cannot get there within the search range.
Margin alone
This business alone cannot get there within the search range.

Mechanical requirements, not forecasts. The separate sales-only and single-business factors are searched from 0.1× to 6×; an unsolved comparison means this business alone cannot get there within those bounds. Single-business revenue changes apply from FY2 onward; margin changes scale the full EBIT or EBITDA margin path. Mixed groups show revenue-weighted EBIT and EBITDA margins separately. Requirements above 100% are not feasible margins. Joint rows instead search non-negative uniform margin factors only up to the EBIT/EBITDA guardrails; the entire margin path scales, including post-FY2030 convergence. Sales and margins change together only in that table. The rate search runs from the largest terminal growth rate plus 0.5 percentage points to 30% WACC.

The discount rate

Cost of equity
8.84%

r_f 3.87% (5-year average 10-year Treasury yield 3.87% (spot 5.13% on 2026-10-21)) + β 0.99 after Blume adjustment × 5%, rounded to 0.01% (1bp)

WACC
8.09%

methodology §4.5: market-weighted WACC, not rounded

10-year Treasury · model / spot
3.87% · 5.13%

The model uses the recorded 5-year average Treasury yield. The spot yield is shown for context.

Every input, with its source

Show 18 inputs · reported, guidance and rule-based
InputValueBasisWhy
Revenue FY2027Primary retail$154.3BReportedtarget (methodology §4.2), growth 1.5% finanzen.net ↗
Revenue FY2030Primary retail$173.2BGuidancetarget (methodology §4.2), growth 3.9% finanzen.net ↗
EBIT margin FY2030Primary retail14.5%Consensuslinear path to 14.5% by FY2030 (management target) finanzen.net ↗
Maintenance capexPrimary retail2.5%GuidanceFY2026 company capital expenditureabout 2.5% of sales applied pro rata as maintenance proxy; covers region PP&E depreciation and remains below 15%. ir.homedepot.com ↗
Terminal growthPrimary retail2.0%Rulemethodology §4.2 terminal growth for a mature line Valuation methodology §4.2 · Read methodology ↗
Revenue FY2027SRS specialty distribution / Other$16.1BRuletarget (methodology §4.2), growth 26.9% finanzen.net ↗
Revenue FY2030SRS specialty distribution / Other$18.1BGuidancetarget (methodology §4.2), growth 3.9% finanzen.net ↗
EBIT margin FY2030SRS specialty distribution / Other3.4%Consensuslinear path to 3.4% by FY2030 (management target) finanzen.net ↗
Maintenance capexSRS specialty distribution / Other2.5%GuidanceFY2026 company capital expenditureabout 2.5% of sales applied pro rata as maintenance proxy; covers region PP&E depreciation and remains below 15%. ir.homedepot.com ↗
Terminal growthSRS specialty distribution / Other2.0%Rulemethodology §4.2 terminal growth for a mature line Valuation methodology §4.2 · Read methodology ↗
WACCDiscount rates8.09%Rulemethodology §4.5: market-weighted WACC, not rounded FRED DGS10 2021-10-20..2026-10-21
Cost of equityDiscount rates8.84%Ruler_f 3.87% (5-year average 10-year Treasury yield 3.87% (spot 5.13% on 2026-10-21)) + β 0.99 after Blume adjustment × 5%, rounded to 0.01% (1bp) 60 monthly returns vs SPY, 2021-09..2026-09 (adjusted closes)
Tax rateDiscount rates24.3%GuidanceFY2026 effective-tax guide 24.3%. ir.homedepot.com ↗
Cash and short-term investmentsBalance sheet$2.1BReportedcash, cash equivalents and short-term investments us-gaap:CashAndCashEquivalentsAtCarryingValue · 0001628280-26-058715 (filed 2026-08-25)
BorrowingsBalance sheet$49.8BReportedborrowings due within a year plus long-term borrowings; finance leases already included in combined debt tags removed and deducted separately us-gaap:CommercialPaper + us-gaap:LongTermDebtAndCapitalLeaseObligationsCurrent · 0001628280-26-058715 + us-gaap:LongTermDebtAndCapitalLeaseObligations · 0001628280-26-058715
Finance leasesBalance sheet$3.1BReportedfinance lease liabilities (capex-like; deducted once) us-gaap:FinanceLeaseLiabilityCurrent + us-gaap:FinanceLeaseLiabilityNoncurrent · 0001628280-26-058715 (filed 2026-08-25)
SharesBalance sheet0.998BReportedshares outstanding as of 2026-08-18 cover page of 10-Q 0001628280-26-058715
Dividends per yearShareholders$9.3BReportedPaidDec 2025 2.30 plusMar/Jun/Sep 2026 2.33 each=9.29; not forwardannual 9.32. × 0.998B shares ir.homedepot.com ↗

Research notes

  • share-count comparison: 0.996B quarter 2026-05-04..2026-08-02 · 0001628280-26-058715; point-in-time denominator retained
  • cost of equity 8.84% (β 0.99 after Blume adjustment), WACC 8.1%

Signal Ledger research built from cited consensus, company plans and peer economics because management sets no usable targets — not a forecast and not investment advice. The research desk (GPT-6.1 (Codex)) gathers filings, guidance and targets; deterministic code applies the samepublished rules to every company and checks the result. Inputs may contain errors; follow the source links before relying on them. Read our valuation methodology →