In recent decades Home Depot (HD -0.02%) has grown into one of the largest retailers in the world while generating life-changing investment returns for shareholders. Home Depot stock has turned a one-time investment of $100 at its IPO into more than $3.6 million today.

The company’s secret? It is a thriving company in a growing housing market. Home Depot has amply allocated its financial resources over the years, which, combined with steady sales growth, makes for long-term investors very rich. The million dollar question is whether Home Depot can still do the same for people buying shares today.

I crunched some numbers to find out and outlined the answer.

A best-in-class retail company in a huge market

Today, Home Depot is the world’s largest home improvement retailer, with approximately 2,300 stores in North America. The company generates annual revenues of more than $154 billion. Its enormous size and scale provide a competitive advantage because it can buy and sell products cheaper and deliver them faster than its smaller competitors. Additionally, Home Depot’s large footprint means that most consumers live within a reasonable distance of a store.

But it wasn’t always this way. Even Home Depot started small, and the company’s rise was no accident. The company has been well managed for decades, evidenced by a strong return on invested capital (ROIC), which has continued to increase over time:

HD data on return on invested capital (10 year median) according to YCharts

What does this mean? Home Depot’s operations are efficient; it earns a significant return on every dollar it invests in the business. That could increase over time, and Home Depot’s sales growth only amplifies that effect.

The result is rising cash profits, which Home Depot uses to pay a growing dividend and buy back shares, further improving earnings growth and investment returns. Home Depot’s share count has fallen 24% over the past decade and its earnings per share have risen 211%.

That’s the magic formula.

Will it continue?

It’s fair to wonder at some point whether Home Depot can continue its success as the company grows. Today, Home Depot has a market cap of nearly $420 billion.

The company still has growth opportunities. There is currently a housing shortage in the United States, estimated at approximately 4.5 million homes. Home Depot sells to professionals (builders and contractors) and do-it-yourselfers, giving the company exposure to new construction and renovation spending.

In addition, earlier this year the company acquired SRS Distribution, a specialty distributor in the residential market, for $18.25 billion, opening Home Depot to new verticals such as professional roofing, landscaping and swimming pool construction.

Home Depot estimates its total addressable market at $1 trillion, leaving plenty of room for expansion based on its $154 billion in annual sales. That’s a promising long-term forecast, although investors should keep in mind that Home Depot is a cyclical business due to the ups and downs of the housing market and consumer spending trends.

Want to buy Home Depot today? This is what you can expect

While Home Depot still has growth on the horizon, it’s probably unrealistic to expect the same returns that the stock has delivered to investors over the past few decades. Home Depot is a mature company, evidenced by its pivot to expand and push its way into new niches. Analysts expect Home Depot to grow earnings an average of 9% to 10% per year over the next three to five years. Add in the 2.1% dividend yield and investors can expect an annualized total return of 11% to 13%.

Low double digit returns can add up very nicely, but it will take time. Home Depot is no longer a swing-for-the-fences investment.

Unfortunately, Home Depot’s valuation may reduce these returns somewhat. The stock trades at a price-to-earnings ratio of 28, which is high for a company that is expected to struggle to deliver double-digit earnings growth. I don’t think Home Depot, which trades with a PEG ratio of 2.8, is so expensive that investors should sell the stock or avoid it altogether.

Still, Home Depot is a mature, blue chip stock that’s probably seen its best growth years. The company’s high-quality fundamentals make it an excellent consideration for any diversified long-term portfolio, but will buying Home Depot today be a good start for life? Probably not.