Home Depot (HD) Stock Forecast & Price Target

Home Depot, as the leading home improvement specialty retailer, has historically achieved higher and more consistent sales and earnings growth compared to its primary competitor, Lowe’s, leading to a premium valuation. The steady increase in home prices for 19 consecutive months, combined with favorable trends in commodities and tariffs, is expected to support growth in the home improvement sector, with projections pointing to at least 1% growth in 2025. Furthermore, Home Depot's recent positive comparable sales performance, driven by multiple product categories and hurricane-related sales, reflects an improving trajectory that suggests underlying momentum could continue into 2025 despite broader housing market uncertainties.

Home Depot's financial outlook is negatively impacted by several factors, including a projected decline in adjusted EBIT margin to 13.4%, which is approximately 40 basis points lower than initial expectations, primarily due to sales deleverage and a negative mix shift from the recent tie-up with SRS. Additionally, gross margins have decreased to 32.8%, reflecting a 25 basis point year-over-year decline and exacerbated by collapsing lumber prices and reduced homebuilding demand driven by falling housing affordability. Furthermore, adjusted diluted EPS is anticipated to decline by about 2% from fiscal year 2024, coming in at around $14.94, significantly below consensus estimates, while the guidance indicates a higher-than-expected tax rate of 24.5%.