Surely there are other quality retailers that have equal if not superior track records trading at higher multiples. Gap has juicier margins and a knack for landing on its khaki-decked feet. In the retail world, the valuations just don't get this high. Let's try to sum up my theory of Relativity. Home Depot is clearly overvalued when compared to other home stores and even the retail sector itself.
Low margins come with the territory.
It's not just Home Depot. It is the entire retail segment that fails to meet these high standards. Home Depot does not deserve to be bid up to the rafters. Last week we were dealt the fourth interest rate hike since June. Home Depot has thrived in a low interest environment where cheap mortgage money has kept the home buying market afloat.