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Home Depot Stock Rallies 20% in a Month: Is It Still a Buy?
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Key Takeaways
HD shares rallied 19.5% in a month, outpacing the industry and broader market despite housing challenges.
HD's Q2 sales rose 5.7% to $47.9B, driven by Pro business strength and 11% growth in digital sales.
HD's 22.3X forward P/E, downward EPS revisions and housing pressures suggest waiting for a better entry point.
The Home Depot Inc. (HD - Free Report) has seen strong buying momentum, with shares rallying 19.5% in the past month. The stock outpaced the Zacks Retail - Home Furnishings industry's growth of 18.9% and the Retail-Wholesale sector’s rise of 7.1% in the same period. It also outperformed the S&P 500's 4.5% decline in the past month.
The stock has also outperformed peers such as Floor & Decor Holdings, Inc. (FND - Free Report) and Williams-Sonoma, Inc. (WSM - Free Report) , while it underperformed Lowe’s Companies Inc. (LOW - Free Report) in the past month. Lowe’s, Williams-Sonoma and Floor & Decor have posted growth of 22.2%, 9.2% and 14.2%, respectively.
HD’s 1-Month Performance
Image Source: Zacks Investment Research
At the current price of $351.31, the stock now sits 11.6% below its 52-week high of $397.63 and 26.8% above its 52-week low of $277.15.
Home Depot is trading above its 50-day and 200-day simple moving averages, indicating a favorable technical setup for the stock.
HD Trades Above 50- & 200-Day Moving Averages
Image Source: Zacks Investment Research
The sharp recent rebound reflects renewed investor interest in the home improvement retailer amid improving demand trends and optimism surrounding its strategic initiatives. However, the recent appreciation raises questions about whether the stock offers further upside or whether investors should exercise caution at current levels.
Home Depot: Key Growth Drivers & Challenges to Watch
HD’s strong market position, expanding professional customer business and investments in interconnected retail capabilities remain key growth drivers. The company continues to strengthen its competitive position through strategic investments in its Pro ecosystem, digital capabilities, product innovation and faster fulfillment.
The home improvement retailer's second-quarter fiscal 2026 results reflected resilient demand, with sales increasing 5.7% year over year to $47.9 billion and comparable sales rising 1.7%. Management highlighted broad-based customer engagement, with 13 of its 16 merchandising departments reporting positive comparable sales.
Home Depot's expanding Pro business remains a key growth catalyst. Pro customers outperformed DIY shoppers during the quarter, supported by investments in specialized services, delivery capabilities and expanded product assortments. The integration of SRS Distribution and GMS has strengthened its ability to serve complex professional projects and capture additional customer spending. Meanwhile, digital sales increased 11%, marking the fifth consecutive quarter of double-digit growth. Faster fulfillment, nationwide express delivery and AI-powered tools, including Magic Apron, are further enhancing customer engagement and operational efficiency.
Despite these strengths, persistent housing affordability challenges, elevated borrowing costs and consumer uncertainty continue to pressure larger discretionary remodeling projects. Comparable transactions declined 1%, highlighting uneven demand recovery. Rising fuel, energy and product input costs also present margin challenges, while acquisition-related mix pressures complicate profitability.
Nevertheless, management reaffirmed its fiscal 2026 outlook, anticipating total sales growth of 2.5-4.5% and comparable sales ranging from flat to 2% growth. Home Depot's expanding Pro capabilities and interconnected retail initiatives provide growth opportunities, although housing-market weakness and cost inflation remain key risks to monitor.
How Estimates Are Shaping Up for HD
The Zacks Consensus Estimate for Home Depot’s fiscal 2026 sales and EPS suggests 4.1% and 2.2% year-over-year increases, respectively. For fiscal 2027, the consensus estimate indicates 3.4% and 6.2% growth in sales and EPS, respectively.
The consensus estimate for HD’s fiscal 2026 EPS has moved down by a penny in the past 30 days. Meanwhile, the estimate for fiscal 2027 EPS moved down 0.3% in the past seven days.
Image Source: Zacks Investment Research
HD’s Valuation Snapshot
Home Depot is currently trading at a forward 12-month price-to-earnings (P/E) multiple of 22.27X, which positions it at a premium compared with the industry’s average of 20.53X. The stock is trading above its median P/E level of 21.78X observed in the past five years. The valuation suggests that Home Depot is overvalued.
At this level, Home Depot is trading at a much higher valuation than its key competitor Lowe’s, which has a forward 12-month P/E of 18.05X. Its peers such as Williams-Sonoma and Floor & Decor are delivering solid growth and trade at higher multiples than HD. Williams-Sonoma and Floor & Decor have forward 12-month P/E ratios of 25.52X and 26.45X.
Image Source: Zacks Investment Research
Home Depot Stock: Buy or Wait for a Better Entry?
HD’s recent stock rally, supported by its strong market position, expanding Pro business and digital investments, underscores confidence in its long-term growth prospects. The company’s strategic initiatives, improving customer engagement and resilient operating performance, provide a foundation for sustained growth.
However, downward earnings estimate revisions and a premium valuation relative to the industry and its historical average warrant caution following the sharp share-price appreciation. Persistent housing-market weakness and cost pressures further temper the near-term outlook.
For existing shareholders, staying invested appears prudent, given Home Depot’s solid fundamentals and long-term growth opportunities. However, prospective investors may benefit from waiting for a more attractive entry point, as the Zacks Rank #3 (Hold) stock’s elevated valuation limits its immediate upside potential despite encouraging business fundamentals. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
View the Zacks #1 Rank List
Image: Bigstock
Home Depot Stock Rallies 20% in a Month: Is It Still a Buy?
Key Takeaways
The Home Depot Inc. (HD - Free Report) has seen strong buying momentum, with shares rallying 19.5% in the past month. The stock outpaced the Zacks Retail - Home Furnishings industry's growth of 18.9% and the Retail-Wholesale sector’s rise of 7.1% in the same period. It also outperformed the S&P 500's 4.5% decline in the past month.
The stock has also outperformed peers such as Floor & Decor Holdings, Inc. (FND - Free Report) and Williams-Sonoma, Inc. (WSM - Free Report) , while it underperformed Lowe’s Companies Inc. (LOW - Free Report) in the past month. Lowe’s, Williams-Sonoma and Floor & Decor have posted growth of 22.2%, 9.2% and 14.2%, respectively.
HD’s 1-Month Performance
Image Source: Zacks Investment Research
At the current price of $351.31, the stock now sits 11.6% below its 52-week high of $397.63 and 26.8% above its 52-week low of $277.15.
Home Depot is trading above its 50-day and 200-day simple moving averages, indicating a favorable technical setup for the stock.
HD Trades Above 50- & 200-Day Moving Averages
Image Source: Zacks Investment Research
The sharp recent rebound reflects renewed investor interest in the home improvement retailer amid improving demand trends and optimism surrounding its strategic initiatives. However, the recent appreciation raises questions about whether the stock offers further upside or whether investors should exercise caution at current levels.
Home Depot: Key Growth Drivers & Challenges to Watch
HD’s strong market position, expanding professional customer business and investments in interconnected retail capabilities remain key growth drivers. The company continues to strengthen its competitive position through strategic investments in its Pro ecosystem, digital capabilities, product innovation and faster fulfillment.
The home improvement retailer's second-quarter fiscal 2026 results reflected resilient demand, with sales increasing 5.7% year over year to $47.9 billion and comparable sales rising 1.7%. Management highlighted broad-based customer engagement, with 13 of its 16 merchandising departments reporting positive comparable sales.
Home Depot's expanding Pro business remains a key growth catalyst. Pro customers outperformed DIY shoppers during the quarter, supported by investments in specialized services, delivery capabilities and expanded product assortments. The integration of SRS Distribution and GMS has strengthened its ability to serve complex professional projects and capture additional customer spending. Meanwhile, digital sales increased 11%, marking the fifth consecutive quarter of double-digit growth. Faster fulfillment, nationwide express delivery and AI-powered tools, including Magic Apron, are further enhancing customer engagement and operational efficiency.
Despite these strengths, persistent housing affordability challenges, elevated borrowing costs and consumer uncertainty continue to pressure larger discretionary remodeling projects. Comparable transactions declined 1%, highlighting uneven demand recovery. Rising fuel, energy and product input costs also present margin challenges, while acquisition-related mix pressures complicate profitability.
Nevertheless, management reaffirmed its fiscal 2026 outlook, anticipating total sales growth of 2.5-4.5% and comparable sales ranging from flat to 2% growth. Home Depot's expanding Pro capabilities and interconnected retail initiatives provide growth opportunities, although housing-market weakness and cost inflation remain key risks to monitor.
How Estimates Are Shaping Up for HD
The Zacks Consensus Estimate for Home Depot’s fiscal 2026 sales and EPS suggests 4.1% and 2.2% year-over-year increases, respectively. For fiscal 2027, the consensus estimate indicates 3.4% and 6.2% growth in sales and EPS, respectively.
The consensus estimate for HD’s fiscal 2026 EPS has moved down by a penny in the past 30 days. Meanwhile, the estimate for fiscal 2027 EPS moved down 0.3% in the past seven days.
Image Source: Zacks Investment Research
HD’s Valuation Snapshot
Home Depot is currently trading at a forward 12-month price-to-earnings (P/E) multiple of 22.27X, which positions it at a premium compared with the industry’s average of 20.53X. The stock is trading above its median P/E level of 21.78X observed in the past five years. The valuation suggests that Home Depot is overvalued.
At this level, Home Depot is trading at a much higher valuation than its key competitor Lowe’s, which has a forward 12-month P/E of 18.05X. Its peers such as Williams-Sonoma and Floor & Decor are delivering solid growth and trade at higher multiples than HD. Williams-Sonoma and Floor & Decor have forward 12-month P/E ratios of 25.52X and 26.45X.
Image Source: Zacks Investment Research
Home Depot Stock: Buy or Wait for a Better Entry?
HD’s recent stock rally, supported by its strong market position, expanding Pro business and digital investments, underscores confidence in its long-term growth prospects. The company’s strategic initiatives, improving customer engagement and resilient operating performance, provide a foundation for sustained growth.
However, downward earnings estimate revisions and a premium valuation relative to the industry and its historical average warrant caution following the sharp share-price appreciation. Persistent housing-market weakness and cost pressures further temper the near-term outlook.
For existing shareholders, staying invested appears prudent, given Home Depot’s solid fundamentals and long-term growth opportunities. However, prospective investors may benefit from waiting for a more attractive entry point, as the Zacks Rank #3 (Hold) stock’s elevated valuation limits its immediate upside potential despite encouraging business fundamentals. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.