DCF Studio

    HD · NYQ · Consumer Cyclical

    The Home Depot, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 272.21

    Market price

    USD 341.15

    Implied upside

    -20.2%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2026-01-31

    Value Per Share

    Perpetuity growth
    USD 272.21-20.2%
    Exit multiple
    USD 351.68+3.1%
    Market price
    USD 341.15

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn11bn22bnFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36CAGR
    RevenueUSD 171.5bnUSD 177.2bnUSD 183.0bnUSD 188.7bnUSD 194.4bnUSD 200.0bnUSD 205.7bnUSD 211.2bnUSD 216.7bnUSD 222.2bn+2.9%
    EBITUSD 23.9bnUSD 24.7bnUSD 25.5bnUSD 26.3bnUSD 27.0bnUSD 27.8bnUSD 28.6bnUSD 29.4bnUSD 30.2bnUSD 30.9bn+2.9%
    NOPATUSD 18.9bnUSD 19.5bnUSD 20.1bnUSD 20.7bnUSD 21.4bnUSD 22.0bnUSD 22.6bnUSD 23.2bnUSD 23.8bnUSD 24.4bn+2.9%
    Add depreciation & amortisationUSD 3.8bnUSD 3.9bnUSD 4.1bnUSD 4.2bnUSD 4.3bnUSD 4.4bnUSD 4.6bnUSD 4.7bnUSD 4.8bnUSD 4.9bn+2.9%
    Less capital expenditureUSD -3.7bnUSD -3.9bnUSD -4.2bnUSD -4.5bnUSD -4.8bnUSD -5.1bnUSD -5.4bnUSD -5.7bnUSD -6.0bnUSD -6.3bn+6.3%
    Capex, % of revenue2.1%2.2%2.3%2.4%2.4%2.5%2.6%2.7%2.8%2.8%-
    Less increase in working capitalUSD -694.0mUSD -578.8mUSD -579.5mUSD -578.9mUSD -577.1mUSD -574.1mUSD -569.8mUSD -564.1mUSD -557.2mUSD -548.9m-2.6%
    Free cashflow to firmUSD 18.3bnUSD 18.9bnUSD 19.4bnUSD 19.9bnUSD 20.3bnUSD 20.8bnUSD 21.2bnUSD 21.7bnUSD 22.1bnUSD 22.5bn+2.3%
    Discount factor0.96140.88850.82110.75890.70140.64820.59910.55370.51170.4729-
    Present valueUSD 17.6bnUSD 16.8bnUSD 15.9bnUSD 15.1bnUSD 14.3bnUSD 13.5bnUSD 12.7bnUSD 12.0bnUSD 11.3bnUSD 10.6bn-
    Present Value Of The ForecastUSD 139.9bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.964Reported 0.947, pulled toward 1.0 (Blume)
    Cost of equity8.97%Risk-free + beta x equity risk premium
    Cost of debt5.29%Risk-free + 40bp, the spread for a AAA rating at 8.7x interest cover. Book interest / average debt was lower, at 3.8%.
    Market capitalisationUSD 340.4bn83.9% of capital
    Total debtUSD 65.3bn16.1% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC8.20%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 272.21

    58% of EV

    Forecast FCFF, final year
    USD 22.5bn
    Capex at depreciation, working capital in reinvestment
    USD 24.8bn
    Less reinvestment at g/ROIC (7.5% of NOPAT)
    USD -1.9bn
    Capitalised
    USD 22.9bn
    ROIC (reported)
    33.1%
    Terminal value, undiscounted
    USD 412.2bn
    Terminal value, discounted
    USD 194.9bn
    Enterprise value
    USD 334.8bn
    Less net debt
    USD 64.0bn
    Equity value
    USD 270.9bn

    Exit at 16.2x EBITDA

    Value per shareUSD 351.68

    66% of EV

    Terminal value, undiscounted
    USD 579.4bn
    Terminal value, discounted
    USD 274.0bn
    Enterprise value
    USD 413.9bn
    Less net debt
    USD 64.0bn
    Equity value
    USD 349.9bn

    Spread between methods: 25%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.20%381.32411.12449.22499.51568.78
    7.20%303.40320.71341.89368.33402.15
    8.20%248.80259.49272.21287.54306.31
    9.20%208.43215.31223.33232.77244.01
    10.20%177.39181.92187.13193.18200.24

    Outlined: this model. Green text: above today's price of 341.15. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year1.5%3.0%5.4%
    EBIT margin15.3%13.9%16.8%
    Discount rate-8.2%7.2%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.