Home Depot (HD) AI Stock Analysis

• Market Cap: $343.89B
• Dividend Yield: 2.62%
• Average Volume (3M): 4.31M
• Price to Earnings (P/E): 23.2
• Beta (1Y): 0.86
• Revenue Growth: 4.48%
• EPS Growth: -1.27%
• Country: US
• Employees: 470,100
• Sector: Consumer Cyclical
• Sector Strength: 60
• Industry: Home Improvement
• EPS (TTM): 14.91
• Shares Outstanding: 993,928,160
• 10 Day Avg. Volume: 4,905,597
• 30 Day Avg. Volume: 4,308,701
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 2.26
• Price to Cash Flow (P/CF): 20.60
• P/FCF Ratio: 25.50
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $437.58
• Price Target Upside: 23.24% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 27

Home Depot shows robust financial performance and strategic growth initiatives, but faces challenges with high debt and a potentially overvalued stock. Technical indicators suggest caution, while strategic investments and a solid earnings call outlook support a cautiously optimistic view.

Positive Factors

Customer Engagement

Home Depot has never delivered faster nor has seen higher service levels across channels, resulting in more customer engagement, both Pro and DIY.

Earnings

Home Depot reported adjusted earnings per share that exceeded both Goldman Sachs' estimate and consensus expectations.

Sales Performance

Net sales increased by 14.1% year-over-year, surpassing both Goldman Sachs' and consensus expectations.

Negative Factors

Guidance

Home Depot's guidance for fiscal year 2025 came in below consensus expectations in terms of sales growth and adjusted earnings per share.

Macro Uncertainty

Macro uncertainty could make Home Depot's medium-term path bumpy, although it is considered a preferred way to take advantage of a housing market bouncing along a bottom.

Operating Margin

Home Depot's operating margin decreased to 11.7%, falling short of Goldman Sachs' estimate and matching the consensus.

Home Depot Business Overview & Revenue Model

Company Description

The Home Depot, Inc. operates as a home improvement retailer. It operates The Home Depot stores that sell various building materials, home improvement products, lawn and garden products, and décor products, as well as facilities maintenance, repair, and operations products The company also offers installation services for flooring, cabinets and cabinet makeovers, countertops, furnaces and central air systems, and windows. In addition, it provides tool and equipment rental services. The company primarily serves homeowners; and professional renovators/remodelers, general contractors, maintenance professionals, handymen, property managers, building service contractors, and specialty tradesmen, such as electricians, plumbers, and painters. It also sells its products through websites, including homedepot.com; blinds.com, an online site for custom window coverings; and thecompanystore.com, an online site for textiles and décor products. As of December 31, 2021, the company operated 2,317 stores in the United States. The Home Depot, Inc. was incorporated in 1978 and is based in Atlanta, Georgia.

How the Company Makes Money

Home Depot makes money primarily through the sale of home improvement products and services. The company's revenue model is based on retail sales from its extensive network of physical stores and its e-commerce platform. Key revenue streams include the sale of building materials, hardware, plumbing, electrical supplies, paint, flooring, and outdoor garden products. Home Depot also generates income from installation services and tool rental services, which cater to customers who require assistance with their home improvement projects. The company benefits from strategic partnerships with suppliers and vendors, allowing it to offer a wide range of products at competitive prices. Additionally, Home Depot's Pro program, which targets professional contractors and tradespeople, contributes significantly to its earnings by offering specialized services, volume pricing, and dedicated support.

Home Depot Financial Statement Overview

Summary

Home Depot demonstrates a strong financial performance with solid revenue growth, profitability, and cash flow generation. Despite a high debt load, the company manages to maintain operational efficiency and profitability. Continuous monitoring of leverage and equity positions is advised to ensure financial stability and growth sustainability.

Income Statement

Home Depot exhibits a strong financial performance with a consistent revenue growth trend and solid profitability margins. The gross profit margin remains stable around 33-34%, and the net profit margin has been consistently healthy, ranging from 9% to 11%. The revenue growth rate over the years has been commendable, with a notable increase from 2020 to 2025. EBIT and EBITDA margins are also strong, indicating effective cost management and operational efficiency.

Balance Sheet

The balance sheet shows substantial leverage with a high debt-to-equity ratio due to significant total debt levels. However, the company maintains a positive return on equity, although it is impacted by low stockholders' equity figures. The equity ratio is low, which suggests a higher reliance on debt financing. Recent improvements in equity figures are positive but still require cautious monitoring.

Cash Flow

Home Depot's cash flow position is robust, with consistent generation of free cash flow, evidenced by positive free cash flow growth over time. The operating cash flow to net income ratio indicates strong conversion efficiency. However, fluctuations in free cash flow growth suggest some volatility in cash generation, requiring attention to sustaining long-term cash flow stability.

Breakdown
Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement		Total Revenue
159.51B	152.67B	157.40B	151.16B	132.11B
	Gross Profit
53.31B	50.96B	52.78B	50.83B	44.85B
	EBIT
21.53B	21.69B	24.04B	23.04B	18.28B
	EBITDA
25.49B	24.94B	27.07B	25.95B	20.84B
	Net Income Common Stockholders
14.81B	15.14B	17.11B	16.43B	12.87B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.66B	3.76B	2.76B	2.34B	7.89B
	Total Assets
96.12B	76.53B	76.44B	71.88B	70.58B
	Total Debt
62.29B	52.24B	50.36B	46.27B	43.42B
	Net Debt
60.63B	48.48B	47.61B	43.93B	35.53B
	Total Liabilities
89.48B	75.49B	74.88B	73.57B	67.28B
	Stockholders Equity
6.64B	1.04B	1.56B	-1.70B	3.30B
Cash Flow		Free Cash Flow
16.32B	17.95B	11.50B	14.01B	16.38B
	Operating Cash Flow
19.81B	21.17B	14.62B	16.57B	18.84B
	Investing Cash Flow
-21.03B	-4.73B	-3.14B	-2.97B	-10.17B
	Financing Cash Flow
-694.00M	-15.44B	-10.99B	-19.12B	-2.98B

Home Depot Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 355.06
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HD, the sentiment is Negative. The current price of 355.06 is below the 20-day moving average (MA) of 356.18, below the 50-day MA of 372.24, and below the 200-day MA of 382.06, indicating a bearish trend. The MACD of -5.18 indicates Negative momentum. The RSI at 47.30 is Neutral, neither overbought nor oversold. The STOCH value of 67.72 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HD.

Home Depot Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TJX	77 Outperform	$142.56B	29.66	61.98%	1.18%	3.95%	10.34%
TSCO	75 Outperform	$26.24B	24.19	49.83%	1.80%	2.25%	1.00%
HD	68 Neutral	$343.89B	23.20	385.37%	2.62%	4.48%	-1.27%
DG	65 Neutral	$19.65B	17.47	15.89%	2.64%	4.96%	-32.41%
LOW	64 Neutral	$122.58B	17.55	-51.07%	2.12%	-3.13%	-7.21%
FND	61 Neutral	$7.42B	36.99	10.04%	―	0.95%	-16.97%
Sector *	60 Neutral	$7.23B	11.55	3.67%	4.04%	2.96%	-13.54%

Home Depot Corporate Events

Home Depot Adjusts Credit Facilities After Acquisition

Home Depot has adjusted its credit facilities following the acquisition of SRS Distribution Inc. The company terminated its $1 billion three-year credit facility and reduced commitments under its $3.5 billion 364-day credit facility to $2 billion, ensuring a $7 billion borrowing capacity for its commercial paper program.