Is The Home Depot, Inc. overvalued or undervalued?

As of 17 October 2025, the valuation grade for The Home Depot, Inc. moved from very expensive to expensive. The company is currently overvalued based on its high valuation ratios. The P/E ratio stands at 44, significantly higher than the peer Lowe's Companies, Inc., which has a P/E of 22.72. Additionally, the Price to Book Value is exceptionally high at 80.34, and the EV to EBITDA ratio is 27.06, indicating a premium valuation compared to industry norms.
In comparison to its peers, The Home Depot's valuation metrics suggest it is more expensive than Lowe's, which is considered risky with a lower EV to EBITDA of 14.98. Furthermore, the company's recent stock performance shows a mixed picture; while it outperformed the S&P 500 in the past week with a return of 4.30% compared to 1.70%, it has underperformed over longer periods, such as a 5-year return of 36.24% versus the S&P 500's 91.29%. This reinforces the notion that The Home Depot is currently overvalued in the market.