The Home Depot, Inc. (HD) vs Union Pacific Corporation (UNP): Which Is the Better Buy in 2026?
As of 2026-09-17, HD is overvalued at $302, with a DCF intrinsic value of $234 and a margin of safety of -29%. UNP is overvalued at $281, with an intrinsic value of $220 and a margin of safety of -28%. Of the two, UNP has the wider margin of safety.
Rewards
- ★The Home Depot, Inc. has maintained ROIC above 15% for 4 consecutive years, indicating a durable competitive advantage.
- ★The Home Depot, Inc. scores 87/100 on the Economic Moat Score (Wide Moat), with margin stability as the strongest competitive dimension.
- ★Return on equity has consistently exceeded 20% over 4 years, indicating efficient use of shareholder capital.
- ★Union Pacific Corporation has maintained ROIC above 10% for 4 consecutive years, suggesting solid business economics.
- ★Union Pacific Corporation scores 80/100 on the Economic Moat Score (Wide Moat), with margin stability as the strongest competitive dimension.
- ★Return on equity has consistently exceeded 20% over 4 years, indicating efficient use of shareholder capital.
Risks
- ⚠High leverage (3.68x net debt/equity) combined with thin interest coverage (-1.0x) poses financial risk.
- ⚠Insiders have sold $3.3M worth of stock in the past 3 months — significant insider liquidation.
- ⚠Each dollar of retained earnings has produced only $0.15 of earning power — shareholders may have been better served by dividends.
- ⚠FCF yield of 2.8% is below 3%, meaning the market is pricing in substantial future growth to justify the current price.
- ⚠PEG ratio of 2.83 indicates the stock is expensive relative to its expected growth — the market may be pricing in more growth than analysts project.
Key Valuation Metrics
Learn more →Historical Fundamentals
Learn more →Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
$1 Retained Earnings Test
Learn more →> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Discounted Cash Flow (DCF) Analysis
Learn more →Reverse DCF — Market-Implied Growth
Learn more →What growth rate is the market pricing in at $302?
The market implies +10.7% Owner Earnings growth, above historical trends.
Standard FCF implies a demanding +14.8%, reflecting heavy growth investment.
What growth rate is the market pricing in at $281?
The market implies +12.0% Owner Earnings growth, above historical trends.
Standard FCF implies a demanding +17.6%, reflecting heavy growth investment.
Economic Moat Score
Learn more →Wide moat with strength across all dimensions. Margin Stability is the standout factor.
Wide moat driven primarily by margin stability. Reinvestment Efficiency is the area most vulnerable to competitive pressure.
Forensic Accounting
Learn more →M-Score Trend
M-Score Trend
Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.
Ownership Breakdown
Learn more →High insider ownership aligns management incentives with shareholders. Institutional concentration can indicate smart-money conviction but also crowding risk.
Insider Buying Activity
Learn more →Open market purchases · includes direct & indirect ownership · excludes option exercises.
Insider Selling Activity
Learn more →Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives.
🎭 Mr. Market's Mood
Learn more →"Market is pessimistic — investigate whether fears are temporary or structural"
"Market is pricing this stock without strong emotion in either direction"
Composite sentiment score based on market signals. Inspired by Buffett’s "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.
⚖️ Buffett Signal
Learn more →The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
Frequently Asked Questions: HD vs UNP
Is The Home Depot, Inc. or Union Pacific Corporation more undervalued in 2026?▼
Based on our discounted cash flow model, UNP trades at a -27.6% margin of safety (intrinsic value $220 vs. price $281), compared to HD's -29.2% margin of safety (intrinsic $234 vs. $302).
Which stock has a wider economic moat, The Home Depot, Inc. or Union Pacific Corporation?▼
HD scores 87/100 (Wide moat), while UNP scores 80/100 (Wide moat). The moat score measures competitive advantage durability across ROIC consistency, margin stability, revenue predictability, and reinvestment efficiency.
Which company has better free cash flow, The Home Depot, Inc. or Union Pacific Corporation?▼
The Home Depot, Inc. (HD) generates a 3.6% free cash flow yield, compared to Union Pacific Corporation's 2.8%. A higher FCF yield means the business converts more of its market value into cash that can be returned to shareholders or reinvested.
Which stock has higher return on invested capital, The Home Depot, Inc. or Union Pacific Corporation?▼
HD earns 21.5% ROIC versus UNP's 15.9%. A higher ROIC means the company generates more profit per dollar of capital employed, a hallmark of durable competitive advantage in Buffett-style analysis.
Which dividend is safer, The Home Depot, Inc.'s or Union Pacific Corporation's?▼
UNP's dividend earns a safety score of 94/100 (Very Safe), compared to HD's 69/100 (Safe). UNP has raised its dividend for 3 consecutive years.