Is home improvement giant Home Depot (HD 1.61%) stock a buy on the dip? If you're looking for a great value stock, Home Depot stock looks priced to buy today.
The market is hovering just north of flat for the year, and there's a tentative confidence in the economy. Many tariff issues have been worked out for now, and U.S. companies are demonstrating resilience. However, it's fragile. With interest rates still high and the real estate market still low, many companies, specifically related to the housing market, are still under pressure.
Home Depot has been reporting moderate performance, and it's not expecting that to let up as long as conditions remain the way they are right now. Home Depot stock is 18% off its all-time high, and investors should take a look.
Strength under fire
Mortgage rates are still high, and the real estate market is still stagnating. According to Redfin data, housing prices rose in May, while house sales tumbled 6% from last year. The national average 30-year fixed mortage rate was 6.8%, slightly lower from last year, but still elevated.
This is mostly detrimental to Home Depot's business, because people invest in renovating new homes, whether big projects or small. They try to avoid investing in old homes that they plan to leave. The flip side, though, is that if they remain in their older homes, they have no choice but to fix them up to make them livable or comfortable. That provides a natural hedge against negative market forces. That was borne out in recent results, which demonstrate that customers are shopping for small projects while putting big remodeling jobs on hold.
Image source: Home Depot.
Home Depot is the largest home improvement retail chain in the world, and it has a robust omnichannel network serving individuals and pros. The vast and varied business means that it has many levers to pull to generate engagement and sales.
Under any circumstances, Home Depot operates in a great industry because there's always a need for it. Management pointed out that the housing stock is aging, with 55% of U.S. homes at least 40 years old. They're most homeowners' largest asset, and these houses need work.
Leading with purpose
In the 2025 fiscal first quarter (ended May 4), sales were up 9.4%, but comparable sales (comps) were roughly flat year over year. Earnings per share (EPS) declined from $3.63 last year to $3.45 this year, and the results were in line with expectations. For the full year, management is guiding for modest growth in sales and comps and a modest decrease in EPS.
NYSE: HD
Key Data Points
CEO Ted Decker noted that the company is well-prepared for whatever happens with tariffs. Half of its goods already come from the U.S., and it has diversified its supply chain over the past few years. It's continuing these efforts, and he expects that no one country will be responsible for more than 10% of its supplies in a year from now. Because of its scale and diversification, it's agile and has pricing power.
Home Depot has a $1 trillion opportunity, which is recently expanded by acquiring pro supplier SRS Distribution. It opened 13 stores in Q1, which contributed to its excellent sales growth. Although it already has more than 2,300 stores in the U.S., Canada, and Mexico, it still has expansion opportunities.
Don't bet against the best
Home Depot is a top value stock that pays an attractive dividend. The dividend yields 2.6%, and it's increased 290% over the past 10 years.
At the current price, it trades at a price-to-earnings (P/E) ratio of 24. That isn't super cheap, but it's around recent averages. This is what the market thinks Home Depot is worth, because it's reliable for strength and passive income, and it's likely to get back into growth mode under better circumstances.
If you're looking for a top value stock to buy on the dip, Home Depot is an excellent option.
