Shares of The Home Depot, Inc. (HD Quick QuoteHD - Free Report) have lost 12.4% in the past month, underperforming the Zacks Retail - Home Furnishings industry's decline of 10.5%. However, this prominent player in the home improvement market has underperformed the Retail-Wholesale sector and the S&P 500's declines of 6.4% and 0.7%, respectively, in the same period. The stock now sits 16.1% below its 52-week high of $426.75 reached in September 2025.

HD’s 1-Month Performance

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The stock has also underperformed key peers such as Lowe’s Companies Inc. (LOW Quick QuoteLOW - Free Report) and Williams-Sonoma, Inc. (WSM Quick QuoteWSM - Free Report) , while it fared better than Floor & Decor Holdings, Inc. (FND Quick QuoteFND - Free Report) , in the past month. Lowe’s, Williams-Sonoma and Floor & Decor have posted declines of 10.3%, 9.3% and 21.4%, respectively.

Closing at $310.45, Home Depot is trading below its 50-day and 200-day simple moving averages, indicating an unfavorable technical setup for the stock.

HD Trades 50- 50 & 200-Day Moving Averages

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Factors Hurting HD’s Recent Performance

Home Depot’s recent performance reflects improving execution across the business, balanced against continued pressure from the housing environment and elevated operating costs. The latest quarter showed broad-based demand across merchandising categories, with strength in repair and maintenance activity, Pro-related categories and digital channels.

Management also highlighted continued gains in the Pro business, supported by investments in assortment, delivery capabilities, sales teams and specialized services. Improved fulfillment speeds, strong on-shelf availability and greater digital engagement are also helping enhance the customer experience and support market-share gains.

At the same time, the broader operating environment remains challenging. Consumer uncertainty and housing affordability continue to weigh on larger discretionary home-improvement projects. Management noted that housing turnover remains historically depressed, limiting demand for project-related spending that typically accompanies home purchases and moves. While customers continue to spend on smaller repair and maintenance projects, a sustained recovery in larger-ticket discretionary categories likely depends on an improvement in housing conditions.

Profitability also remains influenced by rising fuel, energy and product-input costs, along with acquisition-related mix pressure. Although tariff refunds provided temporary relief, management expects these benefits to be absorbed by higher costs over the year. Overall, Home Depot’s fundamentals are supported by Pro momentum, digital growth and market-share gains, while housing weakness and cost pressures remain the key constraints on near-term earnings growth.

HD’s Downward Estimate Revisions Raise Concerns

The Zacks Consensus Estimate for Home Depot’s fiscal 2026 sales and EPS suggests 4.1% and 2.1% year-over-year increases, respectively. For fiscal 2027, the consensus estimate indicates 3.6% and 6.9% rallies in sales and EPS, respectively. The consensus estimate for fiscal 2026 EPS has been unchanged in the past 30 days. Meanwhile, the estimate for fiscal 2027 EPS has moved down 1% in the past 30 days.

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Home Depot’s Long-Term Growth Story Remains Fundamentally Sound

Home Depot’s long-term growth prospects appear intact, supported by continued investments in its core business, Pro ecosystem, digital capabilities and interconnected customer experience. Management remains focused on improving product availability, enhancing store productivity and deploying technology that enables associates to serve customers more effectively. Faster fulfillment, including same-day, next-day and express delivery capabilities, is strengthening convenience and supporting higher customer engagement. Digital momentum also remains encouraging, with management highlighting continued growth in online traffic and conversion.

The Pro business remains a particularly important long-term growth driver. Investments in delivery, order management, specialized services and broader product assortments are helping Home Depot deepen relationships with professional customers. The integration of SRS and GMS is expanding the company’s capabilities across roofing, building materials and other complex project categories, while cross-selling opportunities across the broader ecosystem should support greater wallet share over time.

However, near-term growth may remain constrained by weak housing turnover, affordability pressures and subdued demand for larger discretionary projects. Nonetheless, continued market-share gains, improving fulfillment capabilities and stronger Pro engagement provide a solid foundation for sustainable long-term growth.

HD’s Valuation Snapshot

Home Depot is currently trading at a forward 12-month price-to-earnings (P/E) multiple of 19.86X, which positions it at a premium compared with the industry’s average of 18.32X. The stock is trading below its median P/E level of 22.14X observed in the past five years. The valuation suggests that Home Depot is overvalued.

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This valuation positioning becomes clearer when viewed alongside key peers. While HD trades at a premium to Lowe’s (with a forward 12-month P/E ratio of 15.59X), it trades at a discount to Williams-Sonoma (22.6X) and Floor & Decor Holdings (21.88X).

How to Play HD Stock?

Home Depot’s recent share-price weakness reflects ongoing concerns around soft housing turnover, affordability pressures, cautious spending on larger discretionary projects and elevated input costs. The stock’s position below its key moving averages, coupled with downward revisions to fiscal 2027 earnings estimates, also points to lingering near-term uncertainty.

Still, the company’s long-term fundamentals remain intact. Investments in the Pro ecosystem, digital capabilities, faster fulfillment, product availability and the interconnected customer experience should support market-share gains over time. The integration of SRS and GMS also strengthens Home Depot’s ability to capture a larger share of professional customer spending.

Given the balance between near-term headwinds and solid long-term growth drivers, investors may prefer to hold this Zacks Rank #3 (Hold) stock until greater clarity emerges around demand trends and earnings growth. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.