ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. The Home Depot's annualized return on capital (ROC %) for the quarter that ended in Apr. 2026 was 16.67%.
As of today (2026-06-24), The Home Depot's WACC % is 10.25%. The Home Depot's ROC % is 18.98% (calculated using TTM income statement data).
The Home Depot generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
The Home Depot (XSWX:HD) ROC % Explanation
ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.
There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.
Why is ROC % important?
Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.
As of today, The Home Depot's WACC % is 10.25%. The Home Depot's ROC % is 18.98% (calculated using TTM income statement data).
The Home Depot generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
Be Aware
Like ROE % and ROA %, ROC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.
The Home Depot ROC % Related Terms
The Home Depot ROC % Historical Data
* Premium members only.
The historical data trend for The Home Depot's ROC % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Note:
The Operating Income data used here is four times the quarterly (Apr. 2026) data.
The tax rate is limited to between 0% and 100%.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
The Home Depot (XSWX:HD) has a ROC % of 16.67% as of Apr. 2026. Return on capital is the ratio of current-period net income to average two-period capital. View historical data on The Home Depot and its competitors.
Is The Home Depot's ROC % too high?
The Home Depot's current ROC % is 16.67%. The Retail - Cyclical industry median ROC % is 4.36. The Home Depot's value of 16.67% is 282.3% above this industry median. Overall, The Home Depot has a GF Score™ of 83/100, reflecting its overall financial health beyond just this single metric.
How does The Home Depot's ROC % compare to LOW and FND?
The Home Depot's ROC % of 16.67% can be compared against companies in the Retail - Cyclical industry. The industry median ROC % is 4.36. The Home Depot's value of 16.67% is 282.3% above this benchmark. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good ROC % for a Retail - Cyclical company?
The median ROC % among Retail - Cyclical companies is 4.36, based on 1,114 companies in the industry. Companies in the top quartile (top 25%) have a ROC % significantly above this median, while those in the bottom quartile fall well below. However, ROC % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. The Home Depot's current ROC % of 16.67% is 282.3% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high ROC % mean?
A high ROC % can signal that a stock is expensive relative to its fundamentals. Return on capital is the ratio of current-period net income to average two-period capital. View historical data on The Home Depot and its competitors. For the Retail - Cyclical industry, the median ROC % is 4.36 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. The Home Depot's current ROC % is 16.67%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is The Home Depot stock overvalued right now?
The Home Depot (XSWX:HD) has a current ROC % of 16.67%. The stock's GF Value™ is CHF312.72, compared to a current price of CHF275.46 — trading 11.9% below its estimated fair value. The current ROC % is 16.67% and 282.3% above the Retail - Cyclical industry median of 4.36. The Home Depot's overall GF Score™ is 83/100 with 3 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is ROC % calculated?
ROC % is calculated from a company's financial statements. For The Home Depot (XSWX:HD), the current ROC % is 16.67% as of Apr. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is The Home Depot (XSWX:HD) Overvalued in 2026?
Based on GuruFocus' analysis, The Home Depot stock appears to be undervalued.
The current stock price of CHF275.46 is trading 11.9% below its estimated GF Value™ of CHF312.72.
Key valuation signals for XSWX:HD:
ROC %: 16.67%
GF Value™: CHF312.72 vs. price of CHF275.46 (11.9% below fair value)
Industry Position: 282.3% above the Retail - Cyclical median
No single metric tells the full story. See the XSWX:HD stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Home Depot is the world's largest home improvement specialty retailer, operating 2,361 warehouse-format stores offering more than 30,000 products in store and 1 million products online in the US, Canada, and Mexico. Its stores offer building materials, home improvement products, lawn and garden products, and decor products and provide various services, including home improvement installation services and tool and equipment rentals. The acquisition of Interline Brands in 2015 allowed Home Depot to enter the MRO business, which has been expanded through the tie-up with HD Supply (2020). The 2024 tie-up with SRS will help grow professional demand in roofing, pool, and landscaping projects, while the 2025 purchase of GMS will lift building product sales through 1,250 distribution locations.
83GF Score
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