HD · Home Depot
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $380
Note written ·
Price against the kill line
8.2% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $380.00, on record since 11 November 2026. The shares are up 4.0% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $380, over the $377.81 average analyst target listed by StockAnalysis on 12 November 2026, which would show the shares leading; or raised fiscal 2026 comparable-sales or adjusted EPS guidance at the 17 November 2026 report.
Research onlyNot in the portfolio.
Catalyst
Key figures from the filings · Consumer Discretionary
Quarter to 2 August 2026, filed 25 August 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 47,861
- Revenue, change on a year (%)
- +5.7
- Gross margin (%)
- 33.7
- Operating margin (%)
- 14.3
- Free cash flow, four quarters ($M)
- 15,099
- Net cash, cash less debt ($M)
- −50,811
- Price to earnings (×)
- 24.5
- Enterprise value to sales (×)
- 2.4
All filed numbers
What Home Depot reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 47,861 | +5.7 | 33.7 | 14.3 |
| first filed | 41,765 | +4.8 | 33.0 | 11.9 |
| first filed | 38,198 | −3.8 | 32.6 | 10.1 |
| first filed | 41,352 | +2.8 | 33.4 | 12.9 |
| first filed | 45,277 | +4.9 | 33.4 | 14.5 |
| first filed | 39,856 | +9.4 | 33.8 | 12.9 |
| Pre-tax income ($M) | 6,315 |
| Net income ($M) four quarters: 14,227 | 4,766 |
| Diluted shares, change on a year (%) against the quarter to 3 August 2025 | +0.2 |
| Operating cash flow ($M) | 18,779 |
| Capital spending ($M) | 3,680 |
| Free cash flow ($M) | 15,099 |
| Cash and short-term investments ($M) | 2,085 |
| Debt ($M) non-current long-term debt and finance leases plus current maturities plus commercial paper | 52,896 |
| Net cash, cash less debt ($M) | −50,811 |
| Deferred revenue ($M) +6.2% on a year | 1,700 |
| Backlog, orders not yet delivered ($M) 0.0% on a year | 1,000 |
| Receivables ($M) | 6,963 |
| Inventory ($M) | 26,847 |
| Shareholders' equity ($M) | 16,617 |
| Market value ($M) | 347,884 |
| Enterprise value, market value plus net debt ($M) | 398,695 |
| Enterprise value to sales (×) | 2.4 |
| Enterprise value to operating income (×) | 19.0 |
| Price to earnings (×) | 24.5 |
| Price to book value (×) | 20.9 |
| Free-cash-flow yield (%) | 4.3 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 1.2% of shares outstanding sold short, 2.2 days of average trading to cover, +6.2% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $3.3M |
| 12 monthsfrom | $0 | $6.7M |
The thesis
Home Depot's shares have climbed on falling mortgage rates, but the company's own numbers still show shrinking customer traffic and no housing turn. On that evidence the shares look more likely to lag the S&P 500 over the next three months than to lead it. The third-quarter report on 17 November 2026 settles it: fiscal 2026 guidance has to hold and transactions have to improve for the climb to rest on results.
The shares closed at $348.26 on 12 November 2026, up from the 52-week closing low of $281.15 on 5 October 2026. The company has not changed its outlook during that climb. Its last word on demand, quoted by Yahoo Finance on 8 October 2026, was: "We don't see anything that tells us there's an inflection."
The rating is Low because the price already carries the rate relief and the company's traffic has not yet confirmed it. Mortgage rates kept easing: Freddie Mac's 30-year fixed average fell to 7.11% on 12 November 2026, a fourth straight weekly decline. That helps the backdrop, but the shares already moved on it. Analysts are split ahead of the report, with targets from $322 at Stifel to $400 at JPMorgan.
Bullish and bearish views on The Home Depot, Inc.
The bull case on The Home Depot, Inc. (HD), in brief: mortgage rates fell four weeks running. The bear case: customer traffic is shrinking.
Bull case
- Mortgage rates fell four weeks running. Freddie Mac's 30-year fixed average went from 7.32% on 22 October 2026 to 7.24%, 7.18% and then 7.11% on 12 November 2026, per the Freddie Mac survey. AP reported that the rate had reached 7.4% in early October.
- Bond yields are off their highs. The 10-year Treasury yield rose above 5.30% in early October and was back at 4.84% at midday on 5 November 2026, its lowest since early September, per AP via WCAX.
- Second quarter beat, guidance held. Sales were $47.9 billion for the quarter ended 2 August 2026, up 5.7%. Adjusted earnings per share (EPS) were $4.92 against $4.68 a year earlier, per the company's 18 August 2026 release.
- Full-year outlook still stands. On 18 August 2026 the company reaffirmed comparable sales of flat to up 2.0%, total sales growth of 2.5% to 4.5%, and adjusted EPS growth of flat to 4.0% from $14.69.
- Most targets sit above the price. StockAnalysis listed an average target of $377.81 across 36 analysts with a "Buy" consensus on 12 November 2026. JPMorgan kept an Overweight rating and raised its target to $400 from $396 on 9 November 2026, per Benzinga.
Bear case
- Customer traffic is shrinking. Comparable customer transactions fell 1.0% in the second quarter. All comparable growth came from a 2.8% rise in average ticket, per the 18 August 2026 release.
- Targets are drifting, some below the price. Stifel kept a Hold rating and cut its target to $322 from $346 on 26 October 2026, per Benzinga. Bank of America kept a Buy rating but cut its target to $397 from $407 around 10 November 2026, per StockAnalysis. Bernstein's Market Perform target of $357, raised from $344 on 10 November 2026, sits less than $9 above the 12 November 2026 close.
- Rates are still far above last year. Freddie Mac's 7.11% average on 12 November 2026 compares with 6.24% a year earlier. AP described US home sales as "stalled this year" in its 5 November 2026 report.
- The Fed still leans toward hiking. The Federal Reserve held at 3.75% to 4.00% on 28 October 2026 in a 10-2 vote, and both dissenters wanted a hike. The next decision is on 9 December 2026.
Price setup
Home Depot closed at $348.26 on 12 November 2026, after $353.42 on 9 November 2026 and $343.47 on 6 November 2026. The shares sit above both the 50-day moving average of $311.54 and the 200-day moving average of $329.49, as of the 12 November 2026 close. The 3-month change is 3.5%. The last close is 12.4% below the 52-week intraday high of $397.63 set on 12 February 2026.
The climb moved with the market. On 2 November 2026 the shares rose 3.21% while the retail sector rose 3.32%, according to TradingKey. On 4 November 2026 the Dow rose 2.9% as the Democrats' sweep of Congress lifted retailers and pulled yields lower, per Benzinga. On 10 November 2026 all 11 S&P sectors fell, per Benzinga.
What the price already reflects: the shares rose from $281.15 on 5 October 2026 to $348.26 on 12 November 2026 with no change to the company's outlook, so the price already carries an easing in rates that the 17 November 2026 report has to confirm in traffic. The 200-day moving average and the $377.81 average analyst target frame the call on either side.
Catalysts ahead
- 17 November 2026: Third-quarter fiscal 2026 earnings report and conference call. Shows whether comparable sales stay within flat to 2.0%, whether transactions improve on the second quarter's 1.0% decline, and whether the adjusted EPS outlook holds or is raised.
- ~18 November 2026 (est.): Lowe's third-quarter report. Indicates whether home-improvement demand trends are industry-wide or specific to Home Depot.
- 19 November 2026: Freddie Mac weekly mortgage rate survey. Shows whether the 30-year average extends its four-week decline below 7.11% or turns back up after the report.
- 9 December 2026: Federal Reserve rate decision and projections. A hike would push against the mortgage-rate easing that drove the October and November climb in the shares.
What would change the view
A daily close above $380, over the $377.81 average analyst target listed by StockAnalysis on 12 November 2026, which would show the shares leading; or raised fiscal 2026 comparable-sales or adjusted EPS guidance at the 17 November 2026 report.
What it trades with
The shares trade with mortgage rates and the 10-year Treasury yield. The sessions of 2 November 2026 and 4 November 2026 rose with broad retail and blue-chip rallies on lower yields, per TradingKey and Benzinga. Lowe's is the closest read-across, since it is expected to report on or around 18 November 2026 and shares the same housing exposure. Homebuilders and building-products names respond to the same Freddie Mac and Fed data, so a rate reversal would likely hit them together. The SRS Distribution business ties part of sales to professional contractors, whose spending follows housing turnover and remodeling activity.
The evidence, claim by claim (8)
- Second-quarter fiscal 2026 sales were $47.9 billion, up 5.7%; adjusted EPS was $4.92 versus $4.68 a year earlier. Home Depot second-quarter fiscal 2026 earnings release · as of
- Comparable customer transactions fell 1.0% while comparable average ticket rose 2.8% in the second quarter. Home Depot second-quarter fiscal 2026 earnings release · as of
- Fiscal 2026 guidance reaffirmed: comparable sales flat to up 2.0%, total sales growth 2.5% to 4.5%, adjusted EPS growth flat to 4.0% from $14.69. Home Depot second-quarter fiscal 2026 earnings release · as of
- Freddie Mac's 30-year fixed mortgage rate averaged 7.11%, down from 7.18% a week earlier and up from 6.24% a year earlier. Freddie Mac Primary Mortgage Market Survey · as of
- JPMorgan maintained an Overweight rating on Home Depot and raised its price target to $400 from $396. Benzinga analyst ratings, 9 November 2026 · as of
- Bernstein maintained a Market Perform rating on Home Depot and raised its price target to $357 from $344. Benzinga analyst ratings, 10 November 2026 · as of
- Stifel maintained a Hold rating on Home Depot and lowered its price target to $322 from $346. Benzinga analyst ratings, 26 October 2026 · as of
- Average analyst price target of $377.81 across 36 analysts, consensus rating Buy. StockAnalysis HD page · as of
Sources
- freddiemac.com ·
- The Home Depot (HD) Stock Price, Chart & News · stockanalysis.com
- The average US 30-year mortgage rate falls to 7.18% this week, its third straight decline · wcax.com ·
- Home Depot (HD) Stock Price Target 2026 & Analyst Forecast · benzinga.com
- Home Depot Inc Stock (HD) Moved Up by 3.21% on Nov 2: Drivers Behind the Movement · tradingkey.com ·
- The Right Trader
Related · shared themes
WSM
Williams-Sonoma
Williams-Sonoma's raised fiscal 2026 outlook and a new round of analyst target raises on 12 November 2026 leave the shares modestly more…
HVT
Haverty Furniture Companies
Haverty Furniture Companies' shares are more likely to lag the S&P 500 over three months: order growth slowed to 2.3% in the third quarter…
ARHS
Arhaus
Arhaus's furniture orders are running far ahead of deliveries, giving the shares a modest edge over the S&P 500: Q3 2026 comparable written…
CHA
Chagee Holdings
Chagee Holdings is modestly more likely to lead the S&P 500 over three months: its shares cleared $14.00 on a $1.95 special dividend. The…
See also · stocks to watch