HD
The Home Depot, Inc.
$302.51
Stable Earnings Power
65%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 32.9% above fair value
You pay
$302.51
Bear
$199.22
Fair
$227.68
Bull
$256.14
Bear
$199.22
-34.1%
$14.23 × 14x P/E
Fair
$227.68
-24.7%
$14.23 × 16x P/E
Bull
$256.14
-15.3%
$14.23 × 18x P/E
Adjust Assumptions
16.0x
14.23$
Key Value Driver
Normalized P/E multiple (16x base case)
Implied Market Multiple
21.3x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (63 analysts)
$378.62
Divergence from AlphaVal
40%
Summary
Applying a 16x P/E to adjusted EPS of $14.23, the base-case value is $227.68 per share. DDM cross-check: $303.88.
Warnings
Dividend-based valuation: $303.88 (above our primary estimate by 33%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $378.62 (from 63 analysts). Our estimate is 40% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples