Is The Home Depot, Inc. overvalued or undervalued?

As of 17 October 2025, the valuation grade for The Home Depot, Inc. has moved from very expensive to expensive, indicating a shift in perception regarding its valuation. The company appears to be overvalued, supported by a P/E ratio of 44, a Price to Book Value of 80.34, and an EV to EBITDA of 27.06. In comparison, Lowe's Companies, Inc., a peer in the same industry, has a significantly lower P/E ratio of 22.72, highlighting the relative overvaluation of The Home Depot.
The stock has underperformed against the S&P 500 over multiple periods, with a year-to-date return of 0.75% compared to the S&P 500's 13.30%, and a one-year return of -5.70% against the S&P's 14.08%. This trend reinforces the notion that The Home Depot is currently overvalued in the market.