Home Depot Stock is Trading Below its Historical Valuation. Should You Buy?

Walmart, Home Depot, and Lowe's, among other retailers, passed higher costs from tariffs to consumers. Walmart plans to use its $2.9 billion refund to invest in pricing strategies, not direct refunds. Other retailers will use refunds to offset costs and maintain pricing. No government refunds are expected.

Home Depot (HD) shares are down 26% over the past year, trading near $300. The company's stock is at 1.8 times trailing sales, within a 10-year range. Q2 2026 sales were $47.9B, up 5.7% YoY, with online sales growing 11%. Management attributes growth to Express Delivery and SRS acquisition, but notes cost pressures. HD reaffirmed fiscal 2026 guidance for flat to 2% comparable sales growth.

Wells Fargo analyst Praneeth Satish maintained a Buy rating on Generac Holdings (GNRC) with a $280 price target. TipRanks upgraded GNRC to Buy with a $194 target. Home Depot (HD) received a Buy rating and $420 target from UBS analyst Michael Lasser. Both stocks have Moderate Buy consensus ratings.

The Federal Reserve raised interest rates to 3.75%-4%, the first hike in three years, with unanimous FOMC support. Most members expect one more hike this year, with no cuts until 2028. Higher rates may negatively impact housing and home improvement stocks, as mortgage applications fell 19% year-over-year. Fed Chair Kevin Warsh emphasized inflation concerns, noting it remains elevated. Some stocks, like Rocket Companies and Home Depot, may benefit if rates drop and housing activity increases.

Home Depot reported strong professional sales and delivery capabilities, with 65% of parcel shipments delivered same or next day, and 55% of big-and-bulky products within two days. The company maintained full-year guidance, emphasizing everyday low pricing and expanding its share in the $700 billion professional market. AI is being used to improve customer tools and internal processes, with plans to invest in productivity improvements and return to a 2x debt-to-EBITDA ratio by mid-2027. Accordin

RH, Floor & Decor, Lowe's, Home Depot, and Williams-Sonoma reported Q2 earnings. RH revenue grew 2.6% YoY, beating estimates. Floor & Decor revenue rose 3% YoY, outperforming expectations. Lowe's revenue increased 8.3% YoY but missed EPS and revenue guidance. Home Depot revenue grew 5.7% YoY, beating estimates. Williams-Sonoma revenue rose 6.7% YoY, surpassing expectations. Shares of these companies have declined since earnings reports.