HD
The Home Depot, Inc.
$328.39
Stable Earnings Power
65%
P/Adj-EPS × Normalized Multiple
Mild
·
Conviction
Overvalued
Trading 14.4% above fair value
You pay
$328.39
Bear
$251.19
Fair
$287.06
Bull
$322.95
Bear
$251.19
-23.5%
$15.02 × 14x P/E
Fair
$287.06
-12.6%
$15.02 × 16x P/E
Bull
$322.95
-1.7%
$15.02 × 18x P/E
Key Value Driver
Normalized P/E multiple (16x base case)
Implied Market Multiple
21.9x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $373.92 from 62 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $287.06 per share.
Warnings
Dividend-based valuation: $383.82 (above our primary estimate by 60%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $373.92 (from 62 analysts). Our estimate is 36% 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