HD
The Home Depot
Dividend / Cash flow
★ Quality 57/100Price today
$321.05
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What this business is made of
The business
The warehouse 10 miles from every jobsite and every garage in the U.S.
World's largest home improvement retailer with ~2,350 stores across North America. Sells materials, tools, and services to two customers: the DIY and the professional (Pro), the latter ~50% of sales and growing via SRS/GMS. Revenue FY2026: $164.7B, GM 33%.
Logistics scale and store density no competitor can replicate: 90% of the U.S. population lives within 10 miles of a Home Depot. The SRS and GMS acquisition extends reach into the complex Pro (roofing, landscaping, drywall), a fragmented $1.2T TAM where distribution rules.
Revenue history
From $151.2B to $164.7B in 4 years. The business grows steadily.
Where each $100 of sales goes
Revenue $164.7B · FY2026
Of every $100 in sales, $91 goes to costs and operations; $9 is left as net profit (9% margin).
Catalysts and risks
Housing turnover recovery (~4M annual sales, a 30-year low) unlocks deferred projects.
SRS/GMS integration: penetration into large Pro, a segment where HD still has <5% share of the $1.2T TAM.
Buybacks return in H1 2027 after digesting the $49B in acquisition debt; historical $8-10B/year.
Debt $55.4B against cash of $1.4B: if rates stay high, the refi weighs on FCF.
Negative comparables: average ticket holds up but transactions have been falling for two years.
Amazon and specialized Pro distributors (Ferguson, Fastenal) erode margins in specific categories.
Charlie's note
“A spectacular business buying a good business with expensive debt at the worst point of the housing cycle. The price is pricing in patience — if you have it, normalized FCF pays for the wait.”
Analysis · May 2026
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