THE HOME Depot, Inc Overview
The Home Depot is the world's largest home improvement retailer by net sales, with $164.7bn of fiscal 2025 revenue generated across 2,359 warehouse-format stores in the United States, Canada and Mexico and more than 1,250 specialty distribution branches operated through its SRS subsidiary. Historically a do-it-yourself destination, the company has over the last decade deliberately reconstructed itself as a dual-engine business: a mature, cash-generative retail network with structurally high returns, bolted to a rapidly assembled professional-contractor distribution platform built through Interline Brands, HD Supply, SRS Distribution, GMS and Mingledorff's. That pivot is the central fact of the current investment case. It has raised the addressable market management cites to approximately $1.2trn, diluted consolidated gross margin, materially increased leverage and depressed return on invested capital from the low-40s to the mid-20s. The company is now in the execution phase — proving that the assembled Pro ecosystem can compound share while the U.S. housing turnover cycle remains historically depressed.
(FY2023 and FY2024 figures are the company's "approximately" disclosures [B]; FY2025 is the precise 10-K figure.)
The company's own description (fiscal 2025 Form 10-K, Item 1)
Home Depot describes itself as "the world's largest home improvement retailer based on net sales for fiscal 2025," offering "a wide assortment of home improvement products, building materials, lawn and garden products, décor products, and facilities MRO products, in stores and online," together with services including "home improvement installation services, and tool and equipment rental." At the end of fiscal 2025 it operated 2,359 stores across the U.S. (including Puerto Rico, the U.S. Virgin Islands and Guam), Canada and Mexico. Stores average approximately 104,000 square feet of enclosed space plus approximately 24,000 square feet of outside garden area. The company also runs distribution and fulfilment networks and e-commerce properties in all three retail geographies.
For disclosure purposes the three geographic operating segments — U.S., Canada, Mexico — are aggregated into a single reportable segment, the Primary segment. Following the GMS acquisition, SRS is organised into four lines of business (roofing and building products; interior and construction products; landscape; pool), each an operating segment, none individually reportable; their results are presented in Other. A fifth SRS vertical, HVAC products, was added in the second quarter of fiscal 2026 with the Mingledorff's acquisition.
Independent characterisation
Structurally, Home Depot is now two businesses under one balance sheet.
Business one — the retail flywheel. Approximately 2,360 big-box stores generating in the order of $65m of annual sales per store, funded by negative working capital economics (payables finance a large share of inventory), producing operating margins that peaked above 15% in the pandemic period and have since normalised toward 13%. The store base is the physical asset behind the interconnected model: for fiscal 2025, approximately 50% of U.S. online orders were fulfilled through a store, and online sales represented 15.9% of consolidated net sales [C], rising to 16.5% in the first quarter of fiscal 2026 (Q1 FY2026 10-Q). This business is mature. Comparable customer transactions have declined in each of the last three fiscal years; growth is coming from ticket, not traffic.
Business two — the Pro distribution platform. HD Supply (MRO), SRS Distribution (roofing, landscape, pool), GMS (drywall, ceilings, steel framing) and Mingledorff's (HVAC), plus Construction Resources, together constitute a branch-based, delivery-intensive, credit-intensive wholesale distributor. Home Depot quantified this ecosystem in July 2026 as "more than 2,360 stores, 1,300 branches, 325 customer-facing warehouses and a fleet of approximately 16,000 delivery assets," addressing a Pro total addressable market of approximately $700bn. This business carries lower gross margin, higher asset intensity and different working-capital dynamics than retail; management explicitly attributed fiscal 2025 gross margin compression partly to "the inclusion of GMS in our consolidated results."
Revenue model
| Revenue stream | Mechanism | Approximate scale |
|---|---|---|
| Retail merchandise (in-store and online) | Product sale, recognised at transfer of control | Dominant; the great majority of Primary segment net sales |
| Services (installation, tool and equipment rental) | Home Depot acts as general contractor using third-party licensed installers; rental is a per-period fee | Disclosed separately in the 10-K revenue disaggregation as "Service" revenue [B]; single-digit percentage of total |
| Specialty trade distribution | Wholesale product sale to contractors, typically on trade credit, delivered to job site | Reported in "Other"; SRS/GMS/Mingledorff's |
| MRO distribution | Contract and transactional sale to multifamily, hospitality, healthcare, government housing | HD Supply, reported within Primary segment |
| Private label credit card economics | Third-party issued PLCC; Home Depot receives programme economics, does not carry the receivable | — |
Home Depot's revenue is overwhelmingly product sale at point of transaction. There is no meaningful subscription or licensing revenue. The revenue architecture is:
There is no advertising-revenue disclosure line, although Home Depot operates a retail media network ("Orange Apron Media") whose revenue is not separately broken out.
Value chain position and customer types
Home Depot sits between manufacturers and end-users, occupying an unusually wide slice of the chain: it is simultaneously a retailer, a wholesale distributor, a general contractor for installation services, an equipment rental company, a private-label brand owner (HDX, Husky, Hampton Bay, Home Decorators Collection, Glacier Bay, Vigoro, Everbilt, Lifeproof) and a logistics operator. It does not manufacture, and it maintains sourcing offices in Mexico, Canada, India, Vietnam, Taiwan, China and parts of Europe.
Three customer groups, per the 10-K:
DIY: homeowners completing their own projects.
DIFM: homeowners who engage a professional; served through in-store, online and in-home consultation channels across flooring, water heaters, bath, garage doors, cabinets, countertops, sheds, furnaces, central air, windows and window coverings.
Pro: renovators/remodelers, general contractors, homebuilders, maintenance professionals, property managers, building service contractors and specialty trades (electricians, landscapers, insulation installers, plumbers, painters, pool contractors, roofers, wallboard and ceiling installers). The 10-K explicitly notes these customers serve residential, multifamily, hospitality and commercial facilities "including educational, healthcare, governmental, institutional, and office buildings, as well as data centers."
End-markets
Residential repair and remodel (the core), residential new construction (indirectly, through Pro and SRS/GMS), multifamily and hospitality MRO, light commercial construction and facilities maintenance, and — a newer and increasingly cited vertical — data-centre construction, which appears in the fiscal 2025 10-K's description of Pro end-markets for the first time in that form.
Financial Narrative
Reporting note: fiscal 2024 contained 53 weeks; the extra week added approximately $2.5bn of sales and approximately $0.30 of diluted EPS to that year. All other years shown contain 52 weeks. Fiscal 2024 and fiscal 2025 figures are Tier A; fiscal 2021–2023 figures are [B] unless independently confirmed above.
Income statement
Revenue CAGR FY2021–FY2025: 2.17%. Net earnings CAGR over the same period: −3.65%. That divergence is the entire story of the last four years.
Ratios
ROIC for fiscal 2021–2023 is Tier [B]; fiscal 2024 (31.3%) and fiscal 2025 (25.7%) are the company's own disclosed figures. Note also the interim disclosure: trailing-twelve-month ROIC was 26.3% at the end of Q3 fiscal 2025 versus 31.5% a year earlier, which management attributed to higher average long-term debt and higher average equity arising from SRS financing.
Commentary — trends, inflections and drivers
Revenue. The fiscal 2021 peak of $151.2bn was pandemic-inflated; the subsequent path is not a growth story but a mix story. Organic retail revenue has been essentially flat to down for four years — comparable transactions have fallen every year since fiscal 2021, cumulatively about 14% — while reported revenue has been carried upward by M&A. Fiscal 2025's $5.2bn increase is almost entirely attributable to SRS annualisation plus GMS, partly offset by the loss of the 53rd week. Strip out acquisitions and Home Depot's top line has gone nowhere since fiscal 2022. This is the central diagnostic fact for anyone underwriting the equity.
Gross margin. Remarkably stable at 33.3–33.6% across five years — but the composition has changed. Within fiscal 2025, the Primary segment benefited from lower shrink and supply-chain efficiencies, which were offset by the mix effect of consolidating GMS. Q4 fiscal 2025 gross margin of approximately 32.6% (down 20bp) was explicitly attributed to GMS mix. Fiscal 2026 gross margin is guided to approximately 33.1%, a further 20bp of distribution-mix dilution.
Operating margin. The clearest deterioration in the model: 15.3% in fiscal 2022 to 12.7% in fiscal 2025, a 260bp compression, of which roughly 40bp is acquired intangible amortisation (hence adjusted operating margin of 13.1%). The residual is deleverage on a flat sales base plus deliberate reinvestment. SG&A rose from 16.1% of sales in fiscal 2022 to 18.6% in fiscal 2025. Management attributed the fiscal 2025 increase specifically to higher payroll and related costs plus the absence of a non-recurring legal-related benefit recognised in fiscal 2024 within the Primary segment. Fiscal 2026 guidance of 12.4–12.6% implies a further, if modest, step down.
Below the line. Net interest expense has more than doubled from approximately $1.3bn in fiscal 2021 to $2.3bn in fiscal 2025 — the direct cost of the SRS and GMS transactions. Interest coverage has fallen from 15.8x to 8.7x. Fiscal 2026 guidance assumes approximately $2.3bn again.
Earnings. Diluted EPS peaked at $16.69 in fiscal 2022 and has declined in each of the three years since, to $14.23 — a 15% cumulative decline. Critically, the share count has been rising, not falling, since buybacks were suspended in March 2024: diluted shares went from 993m in fiscal 2024 to 995m in fiscal 2025 to 996m in Q2 fiscal 2026. Home Depot has lost the EPS support mechanism that flattered the previous decade.
Cash flow. Operating cash flow fell from $19.8bn to $16.3bn in fiscal 2025, driven by a $3.1bn working capital outflow (versus a $0.7bn inflow in fiscal 2024) as inventory built to $25.8bn. Free cash flow of $12.6bn only just covered the $9.2bn dividend with $3.5bn left over — the thinnest coverage in the five-year window and the arithmetic reason buybacks have not resumed.
Balance sheet. Total debt rose from $40.1bn to $55.8bn over five years and net debt/EBITDA from roughly 1.5x to 2.17x. Notably, fiscal 2025 saw a sharp increase in commercial paper reliance: $4.5bn outstanding at 1 February 2026 at a 3.7% weighted average rate, up from $316m a year earlier, used to bridge the GMS purchase. Equity has been rebuilt from a $1.7bn deficit in fiscal 2021 to $12.8bn — not through profitability but through the cessation of buybacks. Goodwill and intangibles now stand at $32.7bn, 31% of total assets, versus $7.9bn (11%) in fiscal 2021. That is a materially different balance sheet and a materially different impairment risk profile.
Cash conversion cycle. Deteriorated from 29 days in fiscal 2021 to 57 days in fiscal 2025. Inventory turns fell to 4.4x from 4.7x, and receivables days rose from 8 to 12 as trade-credit-intensive distribution revenue grew. This is a structural consequence of the wholesale pivot, not a working-capital management failure, but it permanently lowers the model's cash-generation efficiency.
Fiscal 2026 year-to-date (six months ended 2 August 2026)
Q2 fiscal 2026 in isolation was the strongest quarter in three years: sales +5.7% to $47.9bn, comps +1.7%, adjusted EPS +5.1% to $4.92, and operating cash flow for the half up $2.5bn year on year on a working capital swing. Approximately $730m of IEEPA tariff refunds had been received by 2 August 2026, of which roughly $685m was recorded as a reduction of cost of goods sold, primarily within the Primary segment — a genuine but non-recurring tailwind that materially flatters H1 gross margin and must be adjusted out of any run-rate.
7. SEGMENTAL AND GEOGRAPHIC REVENUE MAPPING
What is and is not disclosed
Home Depot does not disclose revenue by country. It discloses:
-
Net sales split between the U.S. and outside the U.S. (a two-way split only)
-
Net property and equipment split between the U.S. and outside the U.S.
-
Comparable sales for the total company and for the U.S. separately
-
Segment net sales (Primary versus Other)
-
Primary segment net sales by merchandising department
Canada and Mexico are never separately quantified. Revenue by segment × geography is not disclosed and cannot be constructed.
Net property and equipment by geography (proxy for asset deployment)
Non-U.S. PP&E is approximately 9.4% of the total and has declined in absolute terms in fiscal 2024 — partly currency, partly the fact that essentially all incremental capital (new stores, supply chain, SRS branches) is being deployed domestically.
Net sales by geography
Directionally, the U.S. accounts for roughly 92–93% of net sales [C], given that SRS/GMS are almost entirely North American with a large U.S. skew, Canada and Mexico together account for 10.5% of associates, and non-U.S. PP&E is 9.4% of the total.
Growth by geography, inferred from comparable sales
The consistent pattern in fiscal 2025 and Q2 fiscal 2026 is that total company comps exceeded U.S. comps — meaning Canada and Mexico outperformed the U.S. In Q2 fiscal 2025 the gap ran the other way (total +1.0% vs U.S. +1.4%) because FX cost approximately 40bp. In Q1 fiscal 2026, FX added approximately 55bp, so the underlying international outperformance was smaller than the headline.
Fastest growing: Mexico, which has been Home Depot's highest-comp geography for several years and where the associate base of 17,800 is growing. Slowest/declining: the U.S. big-ticket, housing-turnover-dependent categories — appliances, flooring, kitchen, millwork — where mortgage rates and historically low housing turnover have suppressed demand. The fiscal 2025 10-K states the position plainly: elevated rates and high home prices "have contributed to historically low levels of housing turnover, which has reduced demand for projects and other purchases associated with buying and selling a home."
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Income Statement and Per-Share Data
| Metric (USD Mn unless stated) | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Net sales | 151,157 | 157,403 | 152,669 | 159,514 | 164,683 |
Cost of sales | 100,325 | 104,623 | 101,709 | 106,206 | 109,818 |
Gross profit | 50,832 | 52,780 | 50,960 | 53,308 | 54,865 |
SG&A | 23,098 | 25,317 | 26,592 | 28,748 | 30,702 |
Depreciation and amortization (opex line) | 2,352 | 2,455 | 2,679 | 3,034 | 3,273 |
Operating income | 23,040 | 24,039 | 21,689 | 21,526 | 20,890 |
EBITDA (operating income plus total D&A) | 25,680 | 26,840 | 24,960 | 25,287 | 25,011 |
Interest and other, net | 1,347 | 1,617 | 1,748 | 2,120 | 2,288 |
Pre-tax income | 21,693 | 22,422 | 19,941 | 19,406 | 18,602 |
Provision for income taxes | 5,260 | 5,372 | 4,781 | 4,600 | 4,446 |
Net earnings | 16,433 | 17,105 | 15,143 | 14,806 | 14,156 |
Basic EPS (USD) | 15.59 | 16.75 | 15.14 | 14.96 | 14.26 |
Diluted EPS (USD) | 15.53 | 16.69 | 15.11 | 14.91 | 14.23 |
Adjusted diluted EPS (USD) | 15.53 | 16.69 | 15.11 | 15.24 | 14.69 |
Dividends per share (USD) | 6.60 | 7.60 | 8.36 | 9.00 | 9.20 |
Gross margin (%) | 33.6 | 33.5 | 33.4 | 33.4 | 33.3 |
Operating margin (%) | 15.2 | 15.3 | 14.2 | 13.5 | 12.7 |
Adjusted operating margin (%) | 15.2 | 15.3 | 14.2 | 13.8 | 13.1 |
EBITDA margin (%) | 17.0 | 17.1 | 16.3 | 15.9 | 15.2 |
Net margin (%) | 10.9 | 10.9 | 9.9 | 9.3 | 8.6 |
Comparable sales (%) | 11.4 | 3.1 | -3.2 | -1.8 | 0.3 |
Comparable transactions (%) | -3.6 | -6.4 | -3.4 | -1.0 | -1.0 |
Comparable average ticket (%) | 15.4 | 10.1 | 0.3 | -0.9 | 1.4 |
Customer transactions (millions) | 1,855.2 | 1,740.6 | 1,687.2 | 1,637.2 | 1,601.5 |
Average ticket (USD) | 80.02 | 89.66 | 90.10 | 89.31 | 90.56 |
Weeks in fiscal year | 52 | 52 | 52 | 53 | 52 |
Balance Sheet
| Metric (USD Mn) | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Cash and cash equivalents | 2,343 | 2,757 | 3,760 | 1,659 | 1,389 |
Receivables, net | 3,426 | 3,317 | 3,328 | 4,903 | 5,597 |
Merchandise inventories | 22,068 | 24,886 | 20,976 | 23,451 | 25,817 |
Total current assets | 29,055 | 32,471 | 29,055 | 31,683 | 34,391 |
Net property and equipment | 25,199 | 25,631 | 26,154 | 26,702 | 28,021 |
Operating lease right-of-use assets | 5,968 | 6,359 | 7,884 | 8,592 | 9,204 |
Goodwill | 7,449 | 7,898 | 8,455 | 19,475 | 22,344 |
Intangible assets, net | 461 | 429 | 2warn | 8,983 | 10,329 |
Total assets | 71,876 | 76,445 | 76,530 | 96,119 | 105,095 |
Short-term debt (commercial paper) | 1,035 | 1,035 | 0 | 316 | 4,464 |
Accounts payable | 13,462 | 11,443 | 10,037 | 11,938 | 11,491 |
Current installments of long-term debt | 2,447 | 1,231 | 1,368 | 4,582 | 4,967 |
Total current liabilities | 28,693 | 23,110 | 23,110 | 28,661 | 32,424 |
Long-term debt, excl. current | 36,604 | 39,952 | 42,743 | 48,485 | 46,341 |
Total liabilities | 73,572 | 74,883 | 75,486 | 89,479 | 92,282 |
Total stockholders' equity | -1,696 | 1,562 | 1,044 | 6,640 | 12,813 |
Total debt (ST + current LTD + LTD) | 40,086 | 42,218 | 44,111 | 53,383 | 55,772 |
Net debt | 37,743 | 39,461 | 40,351 | 51,724 | 54,383 |
Working capital | 362 | 9,361 | 5,945 | 3,022 | 1,967 |
Cash Flow
| Metric (USD Mn) | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Net cash provided by operating activities | 16,571 | 14,615 | 21,172 | 19,810 | 16,325 |
Capital expenditures | 2,566 | 3,119 | 3,226 | 3,485 | 3,679 |
Free cash flow (OCF less capex) | 14,005 | 11,496 | 17,946 | 16,325 | 12,646 |
Payments for businesses acquired, net | 0 | 0 | 0 | 17,644 | 5,410 |
Cash dividends paid | 6,985 | 7,789 | 8,406 | 8,929 | 9,152 |
Repurchases of common stock | 14,809 | 6,696 | 8,000 | 649 | 0 |
Total capital returned to shareholders | 21,794 | 14,485 | 16,406 | 9,578 | 9,152 |
Proceeds from long-term debt, net | 2,989 | 3,993 | 7,182 | 10,010 | 2,161 |
Repayments of long-term debt | 2,872 | 2,762 | 1,200 | 1,536 | 5,040 |
Capex as % of sales | 1.7 | 2.0 | 2.1 | 2.2 | 2.2 |
Returns & Leverage Ratios (%) and Financial Ratios (x)
| Ratio | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Return on equity (%) — average equity | not meaningful | not meaningful | not meaningful | 385.6 | 145.5 |
Return on assets (%) — average assets | 23.9 | 23.1 | 19.8 | 17.2 | 14.1 |
Return on invested capital (%) — company definition | 44.7 | 44.7 | 41.4 | 31.3 | 25.7 |
Current ratio (x) | 1.01 | 1.41 | 1.26 | 1.11 | 1.06 |
Total debt to equity (x) | not meaningful | 27.03 | 42.25 | 8.04 | 4.35 |
Net debt to EBITDA (x) | 1.47 | 1.47 | 1.62 | 2.05 | 2.17 |
Interest coverage (operating income / interest expense, x) | 15.8 | 14.9 | 11.7 | 9.3 | 8.7 |
Asset turnover (x, average assets) | 2.19 | 2.12 | 2.00 | 1.85 | 1.64 |
Inventory turnover (x, company disclosure) | 5.2 | 4.2 | 4.8 | 4.7 | 4.4 |
Days inventory outstanding (derived) | 70 | 87 | 76 | 78 | 83 |
Days sales outstanding (derived) | 8 | 8 | 8 | 11 | 12 |
Days payables outstanding (derived) | 49 | 40 | 36 | 41 | 38 |
Cash conversion cycle (derived, days) | 29 | 55 | 48 | 48 | 57 |
Effective tax rate (%) | 24.2 | 24.0 | 24.0 | 23.7 | 23.9 |
Dividend payout ratio (% of diluted EPS) | 42.5 | 45.5 | 55.3 | 60.4 | 64.7 |
Cash Flow and Per-Share Data
| Metric (USD Mn unless stated) | H1 FY2025 | H1 FY2026 |
|---|---|---|
Net sales | 85,133 | 89,626 |
Gross profit | 28,584 | 29,896 |
Operating income | 11,688 | 11,820 |
Adjusted operating income | 11,966 | 12,169 |
Net earnings | 7,984 | 8,055 |
Diluted EPS (USD) | 8.03 | 8.09 |
Adjusted diluted EPS (USD) | 8.24 | 8.35 |
Operating cash flow | 8,968 | 11,422 |
Capital expenditures | 1,723 | 1,724 |
Comparable sales (%) | 0.4 | 1.2 |
Key Financials
| Metric (USD Mn) | FY2022 | FY2023 | FY2024 |
|---|---|---|---|
Net property and equipment in the U.S. | 23,057 | 23,347 | 24,193 |
Net property and equipment outside the U.S. | 2,574 | 2,807 | 2,509 |
Total net property and equipment | 25,631 | 26,154 | 26,702 |
Key Financials and Margin Analysis (%)
| Metric | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
Total net sales (USD Mn) | 152,669 | 159,514 | 164,683 |
U.S. share of associates (%) | — | — | 89.4 |
“—” = not publicly disclosed.
Margin Analysis (%) and Key Financials (bps)
| Metric (%) | FY2023 | FY2024 | FY2025 | Q1 FY2026 | Q2 FY2026 |
|---|---|---|---|---|---|
Total company comparable sales | -3.2 | -1.8 | 0.3 | 0.6 | 1.7 |
U.S. comparable sales | -3.5 | -1.8 | 0.5 | 0.4 | 1.3 |
FX impact on total comps (basis points) | — | — | — | 55 | — |
“—” = not publicly disclosed.
Valuation Snapshot
| Metric | Value |
|---|---|
Share price, early September 2026 | approximately 318 USD [C] |
Market capitalisation, 7 September 2026 | approximately 320.3 USD bn [C] |
Market capitalisation, 1 September 2026 (alternative source) | 324.35 USD bn [C] |
52-week high | 426.75 USD |
52-week low | 289.10 USD |
All-time closing high | 431.37 USD on 6 December 2024 |
One-year market cap change (to 1 September 2026) | −19.9% |
Market capitalisation, 11 November 2025 (reference point) | 369.40 USD bn at a 370.43 USD share price |
Five-year total shareholder return (per 2026 proxy, through fiscal 2025) | 56.3% |
Aggregate market value held by non-affiliates, 1 August 2025 | 371.8 USD bn |
Share Price History
| Period | Approximate price performance |
|---|---|
One year (Sep 2025 to Sep 2026) | approximately −20% |
Three years | approximately flat to modestly negative [C] |
Five years (fiscal, per proxy TSR including dividends) | +56.3% |
Capital Markets
| Metric | Home Depot (derived) |
|---|---|
P/E on FY2025 diluted EPS of 14.23 (x) | 22.3 |
P/E on FY2025 adjusted diluted EPS of 14.69 (x) | 21.6 |
Forward P/E on FY2026 guidance midpoint of approximately 14.51 (x) | 21.9 |
EV (market cap plus net debt of 54.4bn), USD Bn | approximately 374 |
EV/EBITDA on FY2025 EBITDA of 25.0bn (x) | approximately 15.0 |
EV/Sales on FY2025 net sales of 164.7bn (x) | approximately 2.27 |
P/B on FY2025 equity of 12.8bn (x) | approximately 25 |
Price/Sales (x) | approximately 1.94 |
Dividend yield on 9.32 annualised (%) | approximately 2.93 |
FCF yield on FY2025 FCF of 12.6bn (%) | approximately 3.95 |
Data Point Details
| Data point | Value |
|---|---|
UBS | Buy; price target lowered to 420 USD from 430 USD post-Q2 FY2026 [C] |
Morningstar | Wide economic moat rating based on economies of scale and brand equity; forecasts approximately $172bn of 2026 revenue; describes the shares as trading at a premium to fair value [C] |
Per-Share Data and Margin Analysis (%)
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | FY2026 (declared) |
|---|---|---|---|---|---|---|
Dividends per share (USD) | 6.60 | 7.60 | 8.36 | 9.00 | 9.20 | 9.32 |
Year-on-year increase (%) | 15.8 | 15.2 | 10.0 | 7.7 | 2.2 | 1.3 |
Cash dividends paid (USD Mn) | 6,985 | 7,789 | 8,406 | 8,929 | 9,152 | not applicable |
Payout ratio (% of diluted EPS) | 42.5 | 45.5 | 55.3 | 60.4 | 64.7 | approximately 64 |
Dividends & Capital Returns and Share Count (millions)
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Repurchases of common stock (USD Mn) | 14,809 | 6,696 | 8,000 | 649 | 0 |
Diluted weighted average shares (millions) | 1,058 | 1,025 | 1,002 | 993 | 995 |
Credit Ratings
| Agency | Long-term | Short-term | Outlook | Last action retrieved |
|---|---|---|---|---|
Moody's | A2 | Prime-1 | Stable | Affirmed 28 March 2024 |
S&P Global | A | A-1 | Stable | Affirmed March 2026 |
Fitch | A | — | — | Historically A [C] |
Components
| Component | USD Mn |
|---|---|
Short-term debt (commercial paper) | 4,464 |
Current installments of long-term debt | 4,967 |
Long-term debt, excluding current installments | 46,341 |
Total debt | 55,772 |
Cash and cash equivalents | 1,389 |
Net debt | 54,383 |
Operating lease liabilities (current plus long-term) | 9,578 |
Scenario Details
| Scenario | Total sales growth (%) | Comparable sales growth (%) | Operating margin (%) | EPS growth (%) |
|---|---|---|---|---|
Fiscal 2026 guidance (reaffirmed 18 Aug 2026) | 2.5 to 4.5 | flat to 2.0 | 12.4 to 12.6 | flat to 4.0 |
Fiscal 2026 adjusted | 2.5 to 4.5 | flat to 2.0 | 12.8 to 13.0 | flat to 4.0 |
Market Recovery Case (Dec 2025, timing unspecified) | 5 to 6 | 4 to 5 | growth faster than sales | mid-to-high single digits |
Accelerated Recovery Case | above the Market Recovery Case | above the Market Recovery Case | not quantified | not quantified |
Timing Details
| Timing | Item | Why it matters |
|---|---|---|
Ongoing | Ted Decker's return from medical leave | The single most important governance question. A return restores the Chair/CEO structure. An extension or permanent transition triggers a succession process — Campbell and McPhail are the internal candidates and both are already discharging the role |
Nov 2026 | Q3 fiscal 2026 results | The first quarter to lap GMS. Also the storm-season quarter — after a stormless H2 fiscal 2025, an average season would be a visible SRS tailwind |
Feb 2027 | Q4 and fiscal 2026 results; dividend decision | A dividend increase materially above 1.3% would signal restored free cash flow confidence; another sub-2% increase would confirm the constraint |
Any quarter | Resumption of share repurchases | $15.0bn authorised and unused since March 2024. The clearest available signal on balance sheet repair |
Ongoing | Net debt/EBITDA and commercial paper balance | 2.17x and $4.5bn respectively at fiscal year end. Termming out CP and delevering toward 2.0x is the precondition for buybacks |
Ongoing | IEEPA tariff refund durability | Approximately $730m received through 2 Aug 2026, embedded in guidance. Reversal or cessation is a direct guidance risk |
Ongoing | U.S. mortgage rates and existing home sales turnover | The single largest external swing factor; the trigger for the Market Recovery Case |
Ongoing | Lowe's execution on FBM and ADG | Lowe's guides to 7–9% fiscal 2026 revenue growth versus Home Depot's 2.5–4.5%. Relative comp performance is the cleanest read on which Pro strategy is working |
Ongoing | QXO consolidation activity in roofing distribution | A well-capitalised acquirer bidding up assets in SRS's largest vertical |
Ongoing | Further M&A | After Mingledorff's, any additional acquisition before buybacks resume would represent a departure from the stated capital allocation sequence and should be read as such |
FY2027 | Completion of the 80-store programme | Transition to a 15–20 store annual run rate |
Ongoing | Pro Acceleration synergy quantification | Watch for management putting a number on cross-sell benefit. Its continued absence is itself information |
Ongoing | Goodwill impairment testing | $22.3bn of goodwill and $10.3bn of intangibles, concentrated in businesses acquired at cycle-peak multiples into a declining end market |
Executive Leadership
Governance Detail
| Role during leave | Executive |
|---|---|
Oversight of day-to-day operations | Ann-Marie Campbell, Senior Executive Vice President |
Oversight of financial management and the Pro subsidiaries | Richard McPhail, Executive Vice President and Chief Financial Officer |
Chair of the Board | Greg Brenneman, independent Lead Director |
Executive Leadership Team
| Name | Title | Notes |
|---|---|---|
Edward P. "Ted" Decker | Chair, President and Chief Executive Officer | CEO since 1 March 2022; Chair since 1 October 2022; joined 2000; previously EVP Merchandising (2014–2020) and President and COO (Oct 2020–Mar 2022); on medical leave since 12 Aug 2026 |
Richard V. McPhail | Executive Vice President and Chief Financial Officer | CFO since 2019; previously SVP Finance and SVP Finance Control and Administration; now also leads the Office of Pro Acceleration (from 30 July 2026) |
Ann-Marie Campbell | Senior Executive Vice President | Joined 1985 as a cashier; former Division President, Southern Division; former EVP U.S. Stores and International Operations; promoted to Senior EVP effective 1 November 2023 |
William D. "Billy" Bastek | Executive Vice President — Merchandising | Began 1989 at Maintenance Warehouse (later HD Supply, acquired 1997); roles include Global Product Merchant, Senior Merchant, Divisional Merchandise Manager and Merchandising VP for building materials; scope expanded July 2026 to include private brands |
Jordan Broggi | Executive Vice President — Customer Experience and President — Online | Age 41 (per FY2024 10-K); EVP since June 2024; SVP and President Online May 2022–June 2024; SVP Finance Oct 2020–May 2022; joined 2013; scope expanded July 2026 to include financial services and loyalty |
Hector A. Padilla | Former Executive Vice President — U.S. Stores and Operations | Served in the role until 12 September 2025 |
Fahim Siddiqui | Former Executive Vice President and Chief Information Officer | Served in the role until 29 May 2025 |
Directors' Remuneration
| Executive | Salary (USD) | Bonus / non-equity incentive (USD) | Stock awards (USD) | Option awards (USD) | All other (USD) | Total (USD) |
|---|---|---|---|---|---|---|
Edward P. Decker | 1,400,000 | 2,657,631 | 9,612,251 | 2,369,917 | 151,328 | 16,191,127 |
Richard V. McPhail | 971,923 | 928,747 | 3,414,074 | 839,919 | 69,633 | 6,224,296 |
Ann-Marie Campbell | 1,000,000 | — | — | — | — | approximately 7000000 |
Major Shareholders
| Holder category | Approximate stake |
|---|---|
Institutional ownership | Approximately 70–75% of shares outstanding [C] |
The Vanguard Group | Approximately 9.5% [C] |
BlackRock | Approximately 7.5% [C] |
State Street Global Advisors | Approximately 4.4% [C] |
Geode Capital Management | Approximately 2.3% [C] |
Capital Research / Capital World | Approximately 2% [C] |
FMR (Fidelity) | Approximately 1.5% [C] |
Morgan Stanley, Northern Trust, JPMorgan, Bank of America, Norges Bank | Approximately 1% or below each [C] |
Insider and director ownership | Below 0.5% in aggregate; no founder or family control block [B] |
Governance Timeline
| Date | Initiative | Detail and strategic intent |
|---|---|---|
Jun 2024 | SRS integration | $18.0bn acquisition closed; establishes Home Depot as a leading specialty trade distributor; increases Pro TAM by approximately $50bn |
FY2024–25 | SRS greenfields and tuck-ins | 20+ greenfield locations and four tuck-in acquisitions in fiscal 2024 alone; further greenfields and tuck-ins across all verticals in fiscal 2025 |
FY2024–25 | QuoteCenter expansion | SRS roofing products extended to nearly every market on the large-job quoting platform; SRS sales through QuoteCenter more than tripled |
FY2024–25 | Pro ecosystem markets | Complex-Pro capability build-out in 17 markets driving over $1bn of annualised incremental sales |
Jun 2025 | Agreement to acquire GMS | Adds drywall, ceilings and steel framing; diversifies SRS away from storm-dependent roofing |
Sep 2025 | GMS close | Becomes SRS's fourth vertical, "interior and construction products" |
Sep 2025 | Senior notes issuance | Three tranches (Sept 2028, Sept 2030, Sept 2035) issued to term out GMS bridge financing |
Dec 2025 | Investor and Analyst Conference | Preliminary FY2026 outlook plus a "Market Recovery Case" and an "Accelerated Recovery Case" |
FY2025 | Field leadership equity investment | Significant increase in equity awards to store managers and assistant store managers |
FY2025 | Magic Apron launch | AI assistant for online product and project inquiries |
FY2025 | Blueprint Takeoffs and Material List Builder | AI tools generating project-specific material lists and quotes for Pros |
FY2025 | Pro Trade Credit expansion | Expanded trade credit offering identified as a growth lever for Pro share of wallet |
FY2025 | FDC Relay | New flatbed delivery method leveraging existing FDCs to broaden market reach |
May 2026 | Mingledorff's acquisition | $1.1bn; SRS enters HVAC distribution — a fifth vertical |
| 2026 | SIMPL acquisition | Warehouse automation start-up acquired following a pilot at a Georgia distribution centre [C] |
| 2026 | Real-time delivery tracking for Pros | Minute-by-minute delivery updates including truck visibility [C] |
Jul 2026 | Organisational realignment | Private brands merged into core merchandising (Bastek); customer experience, online, financial services and loyalty unified (Broggi); Office of Integration becomes the Office of Pro Acceleration (McPhail), coordinating Home Depot Pro, HD Supply, SRS and Construction Resources |
Aug–Sep 2026 | Magic Apron in-store rollout | Localised, multi-language, store-specific knowledge across more than 2,000 U.S. stores [C] |
Targets & Commitments
| Guidance item | Fiscal 2026 |
|---|---|
Total sales growth (%) | 2.5 to 4.5 |
Comparable sales growth (%) | flat to 2.0 |
New stores | approximately 15 |
Gross margin (%) | approximately 33.1 |
Operating margin (%) | 12.4 to 12.6 |
Adjusted operating margin (%) | 12.8 to 13.0 |
Effective tax rate (%) | approximately 24.3 |
Net interest expense (USD Bn) | approximately 2.3 |
Diluted EPS growth from $14.23 (%) | flat to 4.0 |
Adjusted diluted EPS growth from $14.69 (%) | flat to 4.0 |
Capital expenditures (% of total sales) | approximately 2.5 |
Governance Overview
| Metric | Market Recovery Case |
|---|---|
Total sales growth (%) | 5 to 6 |
Total comparable sales growth (%) | 4 to 5 |
Operating profit growth | faster than sales |
Diluted EPS growth | mid-to-high single digits |
Competitive Landscape
Key Competitors
| Competitor | Primary overlap | Scale and positioning |
|---|---|---|
Lowe's Companies (NYSE: LOW) | Big-box home improvement retail; Pro | Fiscal 2025 sales more than $86bn; over 1,700 stores; approximately 300,000 associates; fiscal 2026 guidance of $92–94bn (+7–9%). Executing an almost identical Pro-distribution pivot: Artisan Design Group (approximately $1.325bn, 2025) and Foundation Building Materials ($8.8bn, closed Oct 2025, 370+ locations, approximately $6.5bn 2024 pro forma revenue, approximately $635m adjusted EBITDA). CEO Marvin Ellison. |
Menards (private) | Big-box home improvement, U.S. Midwest | Approximately 350 stores; estimated revenue in the low teens of billions [C]; aggressive price positioning |
Ace Hardware (co-operative) | Convenience hardware | The largest U.S. home improvement store count by outlets; co-operative model; convenience rather than project positioning |
Do it Best / True Value | Hardware co-operatives and wholesale | Fragmented independent channel |
Builders FirstSource (NYSE: BLDR) | Pro building materials, lumber, millwork, components | The largest U.S. supplier of building products to professional builders; heavily levered to single-family starts |
QXO / Beacon Roofing Supply | Roofing distribution — direct SRS competitor | QXO acquired Beacon Roofing Supply in 2025 for approximately $11bn [C], creating a well-capitalised, acquisitive roofing distribution competitor with explicit consolidation ambitions |
ABC Supply (private) | Roofing, siding, windows distribution | The largest U.S. roofing distributor; direct SRS competitor |
SiteOne Landscape Supply (NYSE: SITE) | Landscape supply | Direct competitor to SRS's Heritage Landscape Supply Group |
Pool Corporation (NASDAQ: POOL) | Pool supply distribution | Direct competitor to Heritage Pool Supply Group |
Ferguson Enterprises (NYSE: FERG) | Plumbing, HVAC, waterworks distribution | Now a direct competitor to Mingledorff's and to HD's plumbing Pro business |
Watsco (NYSE: WSO) | HVAC distribution | Direct competitor to the new SRS HVAC vertical |
W.W. Grainger (NYSE: GWW) | MRO distribution | Direct HD Supply competitor |
Fastenal (NASDAQ: FAST) | MRO and fasteners | HD Supply competitor |
Amazon (NASDAQ: AMZN) | Online home improvement, tools, hardware | Price transparency and long-tail assortment pressure; explicitly implicated in the 10-K's reference to "reseller marketplaces" |
Walmart (NYSE: WMT) | Value hardware, seasonal, garden | Traffic competition, especially on seasonal and consumables |
Floor & Decor (NYSE: FND) | Hard-surface flooring | Category specialist taking share in a category where HD's Flooring department has declined |
Sherwin-Williams (NYSE: SHW) | Paint, especially Pro painters | Dedicated Pro paint store network competing with HD's Paint department |
Tractor Supply (NASDAQ: TSCO) | Rural lifestyle, outdoor, fencing | Rural market overlap |
Wayfair (NYSE: W) | Online décor and furnishings | Décor and Home Decorators overlap |
United Rentals / Sunbelt | Equipment rental | Compete with HD's tool and equipment rental |
Peer Comparison FY2025
| Metric | Home Depot FY2025 | Lowe's FY2025 |
|---|---|---|
Revenue (USD Bn) | 164.7 | 86.0 |
Revenue growth (%) | 3.2 | 3.7 |
Comparable sales growth (%) | 0.3 | — |
Operating margin (%) | 12.7 | — |
Adjusted operating margin (%) | 13.1 | — |
Net margin (%) | 8.6 | — |
Store count | 2,359 | over 1700 |
Branch/distribution locations | over 1250 | over 370 (FBM) |
Employees | 472,400 | approximately 300000 |
Revenue per employee (USD) | 348,800 | 286,700 |
Recent Developments
Not identified in the retrieved record: * any material layoffs, restructuring charges, guidance withdrawal, cybersecurity incident, product recall of scale, or new class-action securities litigation over the eighteen-month window.
