HOME DEPOT, INC. (HD) Stock Analysis
HOME DEPOT, INC. (HD) Stock Analysis
Analysis from 10-Q filed 2025-11-25. Data as of Q1 2026.
Overall Grade: F (Concerning)
HOME DEPOT, INC. faces challenges in financial performance that warrant careful analysis.
| Metric | Value | Context |
|---|---|---|
| ROIC | 23.1% | Above industry average |
| FCF Margin | 7.7% | Healthy cash flow |
| Debt/Equity | 4.0x | Elevated debt |
Investment Thesis: Strong return on invested capital of 23.1% suggests durable competitive advantages and efficient capital allocation.
Explore HOME DEPOT, INC.: Earnings History | Filing Intelligence | ROIC Analysis
Profitability: HOME DEPOT, INC. earns 23.1% ROIC, Top 25% in Consumer Discretionary
HOME DEPOT, INC.'s trailing-twelve-month ROIC of 23.1% ranks Top 25% in Consumer Discretionary companies (sector median: 8.8%), driven by NOPAT margin of 9.7% combined with asset turnover of 1.6x. Source: 10-Q filed 2025-11-25. Gross margin of 33.3% with operating margin at 12.7% reflects a competitive pricing environment.
| Metric | HD | Rating | Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 23.1% | Excellent | Above sector median of 8.8% |
| Return on Equity (ROE) | 139.9% | Excellent | Efficient use of shareholder equity |
| Gross Margin | 33.3% | Good | Competitive pricing environment |
| Operating Margin | 12.7% | Good | Moderate operational efficiency |
Cash Flow: HOME DEPOT, INC. generates $12.6B FCF at 7.7% margin, positive NaN/8 quarters
HOME DEPOT, INC. generated $12.6B in free cash flow (TTM), a 7.7% FCF margin, a margin that ranks Top 25% in Consumer Discretionary. Operating cash flow exceeds net income by 1.2x, indicating high earnings quality. FCF was positive in N/A of the last 8 quarters. Source: 10-Q filed 2025-11-25.
| Metric | HD | Rating | Context |
|---|---|---|---|
| Free Cash Flow Margin | 7.7% | Adequate | Healthy cash generation |
| Free Cash Flow (TTM) | $12.6B | Good | Positive cash generation |
| OCF/Net Income | 1.2x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
Balance Sheet: HOME DEPOT, INC. at 4.0x leverage
HOME DEPOT, INC.'s debt-to-equity ratio of 4.0x reflects high leverage. Total debt of $50.8B offset by $1.4B in cash. Source: 10-Q filed 2025-11-25.
| Metric | HD | Rating | Context |
|---|---|---|---|
| Debt to Equity | 4.0x | Red flag | Elevated leverage |
| Net Cash Position | $-49.4B | Warning | Net debt position |
Valuation: HOME DEPOT, INC. trades at 26.3x earnings
HOME DEPOT, INC. trades at a P/E of 26.3x. Free cash flow yield of 3.4% reflects market expectations for growth.
| Metric | HD | Rating | Context |
|---|---|---|---|
| P/E Ratio | 26.3x | Adequate | Premium valuation |
| EV/Sales | 2.5x | Good | Attractive revenue multiple |
| FCF Yield | 3.4% | Adequate | Lower cash yield |
| Dividend Yield | 2.5% | Adequate | Growth focus over income |
Capital Allocation: HOME DEPOT, INC. returns 2.5% shareholder yield
HOME DEPOT, INC.'s total shareholder yield is 2.5% (dividends 2.5% + buybacks). Source: 10-Q filed 2025-11-25.
| Metric | HD | Rating | Context |
|---|---|---|---|
| Total Shareholder Yield | 2.5% | Adequate | Dividend + buyback yield combined |
| Buyback Yield | 0.0% | Adequate | Minimal buyback activity |
| Total Capital Returned (TTM) | $9.2B | Good | Dividends + buybacks returned to shareholders |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 23.1% | Top 25% | 2.6x above |
| Free Cash Flow Margin | 7.7% | Top 25% | 2.8x above |
| Gross Margin | 33.3% | Bottom 50% | 0.8x below |
| Operating Margin | 12.7% | Top 25% | 2.7x above |
| Return on Equity (ROE) | 139.9% | Top 5% | 13.1x above |
| P/E Ratio | 26.3x | N/A | - |
Financial Scorecard
| Metric | HD | Rating | Sector Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 23.1% | Excellent | Top 25% of sector (median: 8.8%) |
| Free Cash Flow Margin | 7.7% | Adequate | Top 25% of sector (median: 2.7%) |
| Gross Margin | 33.3% | Good | Bottom 50% of sector (median: 39.5%) |
| Debt to Equity Ratio | 396.5% | Red flag | High financial leverage |
| P/E Ratio (Price-to-Earnings) | 26.3x | Adequate | Growth premium |
| Free Cash Flow Yield | 3.4% | Adequate | Moderate yield |
Frequently Asked Questions
Q: What is HOME DEPOT, INC.'s Return on Invested Capital (ROIC)?
HOME DEPOT, INC. (HD) has a trailing twelve-month Return on Invested Capital (ROIC) of 23.1%. This compares above the sector median of 8.8%. An ROIC above 20% indicates exceptional capital efficiency and strong competitive advantages.
Q: What is HOME DEPOT, INC.'s Free Cash Flow Margin?
HOME DEPOT, INC. (HD) has a free cash flow margin of 7.7%, generating $12.6 billion in free cash flow over the trailing twelve months. A FCF margin between 5-10% is typical for capital-intensive businesses.
Q: Is HOME DEPOT, INC. stock overvalued or undervalued?
HOME DEPOT, INC. (HD) trades at a P/E ratio of 26.3x, which is above the sector median of N/A. The EV/Sales multiple is 2.5x. Free cash flow yield is 3.4%, which is in line with market averages.
Q: Does HOME DEPOT, INC. pay a dividend?
HOME DEPOT, INC. (HD) currently pays a dividend yield of 2.5%. Including share buybacks, the total shareholder yield is 2.5%. This yield is moderate, suggesting a balance between income and growth reinvestment.
Q: How much debt does HOME DEPOT, INC. have?
HOME DEPOT, INC. (HD) has a debt-to-equity ratio of 4.0x with total debt of $50.8 billion. Net debt position is $49.4 billion.
Q: What is HOME DEPOT, INC.'s revenue and earnings growth?
HOME DEPOT, INC. (HD) grew revenue by 3.2% year-over-year. Earnings per share decreased by 4.6% compared to the prior year. Modest growth indicates a mature business with stable demand.
Q: How does HOME DEPOT, INC. compare to competitors in Consumer Discretionary?
Compared to other companies in Consumer Discretionary, HOME DEPOT, INC. (HD) shows: ROIC of 23.1% is above the sector median of 8.8% (Top 14%). FCF margin of 7.7% exceeds the sector median of 2.7% (Top 23% of sector). Gross margin at 33.3% is 6.2 percentage points lower than sector peers. These rankings are based on MetricDuck's analysis of all Consumer Discretionary companies with available SEC filings.
Q: What warning signs should I watch for with HOME DEPOT, INC.?
Investors in HOME DEPOT, INC. (HD) should monitor these potential warning signs: 1) ROIC has been declining, potentially signaling deteriorating competitive position. 2) Debt-to-equity of 4.0x is elevated. Regular monitoring of SEC filings and quarterly trends is recommended.
Data Source: Data sourced from 10-Q filed 2025-11-25. TTM metrics as of Q1 2026.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
Scope: This analysis covers SEC filing fundamentals — profitability, cash flow, balance sheet, and valuation metrics. For analyst estimates and price targets, consult sell-side research.
This analysis is for informational purposes only and does not constitute investment advice.