April Choppy But May Trends Improved; Final Thoughts on 1Q...

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April Choppy But May Trends Improved; Final Thoughts on 1Q...

May 19, 2026

Investment Conclusion

We are Outperform rated on HD with a price target of $416. We derive our Year-End 2026 target price with a

26x NTM multiple (vs. current at 21.0x) on our 2027 EPS estimates of $15.99 (vs consensus at $16.27).

HD's valuation has re-rated recently and is now trading at 19.6x vs LOW at 17.0x, TSCO at 14.4x, and FND at

21.9x (refers to NTM P/E). To put this valuation in context, it is -0.8 standard deviations below the 5-Year average,

which puts it in the 21st percentile. This compares to LOW, which is trading 0.2 standard deviations below its 5-

Year average. Relative to the S&P, the HD's valuation looks reasonable, with the stock trading at a 5% discount

to the market, versus its last 5-Yr average of a 10% premium. At Depot, getting back to +3.0-4.0% comps is key

for the stock to re-rate. The Large Pro Initiatives also remain disliked by the market as they limit share repurchases

and can dilute margins. However, they expand the company's TAM and drive incremental EBITDA dollars to the

business.

Model Changes: We did lower numbers for 2Q given the soft exit rate in 1Q and tough compares in July. Overall,

EPS ticked down roughly 1% as we factor in continue softness in housing activity with rates at the highest level in

almost 20 years.

Recent Research: HD 1Q EPS | HD Preview | QXO x BLD Txn | Mgmt Commentary | 4Q Takeaways | 4Q

Earnings 1Q Previews: WMT | TGT | COST | HD & LOW | AAP | ORLY | AZO | DG

Exhibit 1 - Broadlines & Hardlines P/E x SSS Matrix Exhibit 2 - HD Absolute Valuation

Source: Wolfe Research, FactSet Source: Wolfe Research, FactSet

Exhibit 3 - Home Improvement Relative Valuation

Source: Wolfe Research, FactSet

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