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HD, Home Depot Inc.

Home Depot runs large warehouse-style stores that sell the things people and contractors need to build, fix, and tend a home: building materials, tools and hardware, lawn and garden goods, décor, and the maintenance, repair, and operations supplies that keep a building running. It makes money the way any retailer does — buying these goods and selling them at a markup, store by store, to do-it-yourselfers and to the professional tradespeople who shop on their behalf. The bulk of the take comes from this core selling; a smaller slice comes from related services around it.

We offer our customers a wide assortment of home improvement products, building materials, lawn and garden products, d cor products, and facilities MRO products, in stores and online.

The Home Depot stores average approximately 104,000 square feet of enclosed space, with approximately 24,000 additional square feet of outside garden area.

Latest annual: FY2026 10-K

HD · Home Depot Inc.

The business

What it sells, where the money comes from, the kind of company it is.

Revenue · FY2026

$164.7B

+3.2% YoY · 5% 5-yr CAGR

Vital signs · TTM, with 5-yr average

Revenue $166.6B 5-yr avg $157.1B

Gross margin 33% 5-yr avg 33%

Operating margin 12.4% 5-yr avg 14.2%

ROIC 25% 5-yr avg 37%

Owner-earnings margin 9% 5-yr avg 9%

Free cash flow margin 9% 5-yr avg 9%

The business in brief

read the 10-K →

What this business is and what moves its needle, from its own SEC filings.

What it is: Revenue is Primary (92%) and Other (8%).
What moves the needle: Most of what fills these shelves is a commodity any rival can stock, so the test is whether scale buys a real edge — purchasing power that lowers the cost of goods, and a store within easy reach of the customer and the pro who cannot wait — rather than a brand the buyer pays up for. Watch the gross margin and return on capital for whether that scale converts to durable economics, and watch how the chain holds price: the filing names intense competition, promotional pricing, and liquidation events from rivals, alongside its dependence on suppliers to keep the goods coming and meeting its standards. The bad case is a business that sells the same nails as everyone else into a swing of housing and big-ticket spending it does not control, where an aggressive competitor or a cycle squeezes the markup. The record below carries the figures.
Is it a good business?: Return on capital has run high across the record (median 41%, above 15% in 10 of 10 years), though buybacks and expensed R&D and brands shrink the capital base, so the figure overstates the underlying economics. The steadier read is owner earnings: roughly 10% of revenue reaches owners as cash, consistently. Whether these returns reflect real pricing power or an accounting artifact is the judgment the 10-K is for.

Drafted from the company's filings and reviewed by hand; every number is shown in full in the sections below.

Where the money comes from

read the 10-K →

The biggest segment, Primary, is also where the profit is made: 92% of revenue and 98% of segment operating profit.

Revenue by reportable segment, FY2026

Operating profit same segments

Primary92%$152.0B98% of profit
Other8%$12.7B2% of profit

By geographyUnited States92%International8%

From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.

The record

Ten years of arithmetic, read across the cycle.

The record, 2017–2026

realized figures from each filing · older years to the left

2017’17	2018’18	2019’19	2020’20	2021’21	2022’22	2023’23	2024’24	2025’25	2026’26	TTMTTMMay 2026
											Income statement
$94.6B	$100.9B	$108.2B	$110.2B	$132.1B	$151.2B	$157.4B	$152.7B	$159.5B	$164.7B	$166.6B	RevenueRevenue
34%	34%	34%	34%	34%	34%	34%	33%	33%	33%	33%	Gross marginGross mgn
18%	18%	18%	18%	19%	17%	17%	17%	18%	19%	19%	SG&A / revenueSG&A/rev
$13.4B	$14.7B	$15.5B	$15.8B	$18.3B	$23.0B	$24.0B	$21.7B	$21.5B	$20.9B	$20.7B	Operating incomeOp. inc.
14.2%	14.5%	14.4%	14.4%	13.8%	15.2%	15.3%	14.2%	13.5%	12.7%	12.4%	Operating marginOp. mgn
$8.0B	$8.6B	$11.1B	$11.2B	$12.9B	$16.4B	$17.1B	$15.1B	$14.8B	$14.2B	$14.0B	Net incomeNet inc.
36%	37%	24%	24%	24%	24%	24%	24%	24%	24%	24%	Effective tax rateTax rate
											Cash flow & returns
$9.8B	$12.0B	$13.2B	$13.7B	$18.8B	$16.6B	$14.6B	$21.2B	$19.8B	$16.3B	$18.0B	Operating cash flowOp. cash
$2.0B	$2.1B	$2.2B	$2.3B	$2.5B	$2.9B	$2.8B	$3.1B	$3.3B	$3.5B	$3.6B	DepreciationDeprec.
($414M)	$1.1B	($390M)	($102M)	$3.1B	($3.1B)	($5.7B)	$2.6B	$1.2B	($1.9B)	($79M)	Working capital & otherWC & other
$1.6B	$1.9B	$2.4B	$2.7B	$2.5B	$2.6B	$3.1B	$3.2B	$3.5B	$3.7B	$3.7B	CapexCapex
1.7%	1.9%	2.3%	2.4%	1.9%	1.7%	2.0%	2.1%	2.2%	2.2%	2.2%	Capex / revenueCapex/rev
$8.2B	$10.1B	$10.7B	$11.0B	$16.4B	$14.0B	$11.5B	$17.9B	$16.3B	$12.6B	$14.3B	Owner earningsOwner earn.
8.6%	10.0%	9.9%	10.0%	12.4%	9.3%	7.3%	11.8%	10.2%	7.7%	8.6%	Owner earnings marginOE mgn
$8.2B	$10.1B	$10.7B	$11.0B	$16.4B	$14.0B	$11.5B	$17.9B	$16.3B	$12.6B	$14.3B	Free cash flowFCF
8.6%	10.0%	9.9%	10.0%	12.4%	9.3%	7.3%	11.8%	10.2%	7.7%	8.6%	Free cash flow marginFCF mgn
$0	$374M	$21M	$0	$7.8B	$421M	$0	$1.5B	$17.6B	$5.4B	$5.5B	AcquisitionsAcquis.
$3.4B	$4.2B	$4.7B	$6.0B	$6.5B	$7.0B	$7.8B	$8.4B	$8.9B	$9.2B	$9.2B	Dividends paidDiv. paid
$6.9B	$8.0B	$10.0B	$7.0B	$791M	$14.8B	$6.7B	$8.0B	$649M	$0	—	BuybacksBuybacks
35%	40%	49%	48%	42%	50%	44%	40%	28%	25%	25%	ROICROIC
184%	594%	—	—	390%	—	1095%	1450%	223%	110%	101%	Return on equityROE
105%	304%	—	—	194%	—	596%	648%	89%	39%	35%	Retained to equityRetained/eq
											Balance sheet
$2.5B	$3.6B	$1.8B	$2.1B	$7.9B	$2.3B	$2.8B	$3.8B	$1.7B	$1.4B	$1.6B	Cash & investmentsCash+inv
$2.0B	$2.0B	$1.9B	$2.1B	$3.0B	$3.4B	$3.3B	$3.3B	$4.9B	$5.6B	$6.6B	ReceivablesReceiv.
$12.5B	$12.7B	$13.9B	$14.5B	$16.6B	$22.1B	$24.9B	$21.0B	$23.5B	$25.8B	$27.3B	InventoryInvent.
$7.0B	$7.2B	$7.8B	$7.8B	$11.6B	$13.5B	$11.4B	$10.0B	$11.9B	$11.5B	$14.4B	Accounts payablePayables
$7.6B	$7.5B	$8.1B	$8.8B	$8.0B	$12.0B	$16.8B	$14.3B	$16.4B	$19.9B	$19.5B	Operating working capitalOper. WC
$17.7B	$18.9B	$18.5B	$19.8B	$28.5B	$29.1B	$32.5B	$29.8B	$31.7B	$34.4B	$37.2B	Current assetsCur. assets
$14.1B	$16.2B	$16.7B	$18.4B	$23.2B	$28.7B	$23.1B	$22.0B	$28.7B	$32.4B	$35.6B	Current liabilitiesCur. liab.
1.3×	1.2×	1.1×	1.1×	1.2×	1.0×	1.4×	1.4×	1.1×	1.1×	1.0×	Current ratioCurr. ratio
$2.1B	$2.3B	$2.3B	$2.3B	$7.1B	$7.4B	$7.4B	$8.5B	$19.5B	$22.3B	$22.5B	GoodwillGoodwill
$43.0B	$44.5B	$44.0B	$51.2B	$70.6B	$71.9B	$76.4B	$76.5B	$96.1B	$105.1B	$107.9B	Total assetsAssets
$22.9B	$25.5B	$27.9B	$30.5B	$37.2B	$39.1B	$43.2B	$44.1B	$53.1B	$51.3B	$51.3B	Total debtDebt
$20.4B	$21.9B	$26.1B	$28.4B	$29.3B	$36.7B	$40.4B	$40.4B	$51.4B	$49.9B	$49.7B	Net debt / (cash)Net debt
13.8×	13.9×	14.8×	13.2×	13.6×	17.1×	14.9×	11.2×	9.3×	8.7×	8.6×	Interest coverageInt. cov.
$4.3B	$1.5B	($1.9B)	($3.1B)	$3.3B	($1.7B)	$1.6B	$1.0B	$6.6B	$12.8B	$13.9B	Shareholders’ equityEquity
0.3%	0.3%	0.3%	0.2%	0.2%	0.3%	0.2%	0.2%	0.3%	0.3%	0.3%	Stock comp / revenueSBC/rev
											Per share
1.23B	1.18B	1.14B	1.10B	1.08B	1.06B	1.02B	1.00B	993M	995M	996M	Shares out (diluted)Shares
$76.66	$85.22	$94.67	$100.48	$122.55	$142.87	$153.56	$152.36	$160.64	$165.51	$167.26	Revenue / shareRev/sh
$6.45	$7.29	$9.73	$10.25	$11.94	$15.53	$16.69	$15.11	$14.91	$14.23	$14.07	EPS (diluted)EPS
$6.61	$8.56	$9.38	$10.04	$15.19	$13.24	$11.22	$17.91	$16.44	$12.71	$14.37	Owner earnings / shareOE/sh
$6.61	$8.56	$9.38	$10.04	$15.19	$13.24	$11.22	$17.91	$16.44	$12.71	$14.37	Free cash flow / shareFCF/sh
$2.76	$3.56	$4.12	$5.43	$5.98	$6.60	$7.60	$8.37	$8.99	$9.20	$9.22	Dividends / shareDiv/sh
$1.31	$1.60	$2.14	$2.44	$2.28	$2.43	$3.04	$3.22	$3.51	$3.70	$3.73	Cap. spending / shareCapex/sh
$3.51	$1.23	$-1.64	$-2.84	$3.06	$-1.60	$1.52	$1.04	$6.69	$12.88	$13.93	Book value / shareBVPS

Per-share growththe realized rate an owner's share compounded

	9-yr	5-yr
Revenue / share	+8.9%/yr	+6.2%/yr
Owner earnings / share	+7.5%/yr	−3.5%/yr
EPS	+9.2%/yr	+3.6%/yr
Dividends / share	+14.3%/yr	+9.0%/yr
Capital spending / share	+12.2%/yr	+10.1%/yr
Book value / share	+15.5%/yr	+33.3%/yr

The record, charted

FY2017–2026

Each measure over its full record; the current point and the worst year marked.

Share count

995Mpeak FY2017

ROIC

25%low FY2026

Gross margin

33%low FY2026

Net debt ÷ owner earnings

3.9×peak FY2026

Owner earnings vs. net income

Owner earningsNet income

The accountant's number, and the cash an owner can take; the gap is the tell.

$12.6Bowner earningsvs.$14.2Bnet incomelow FY2017

Where the cash went

ReinvestBuybacksDividendsAcquisitionsRetainedBeyond op. cash

Each year's outlays against its operating cash: the mix, and how it drifts. The hatched cap is spending beyond that year's operating cash — financed from the balance sheet or borrowing, not operations.

FY2017FY2026

Owner-earnings bridge

FY2022–FY2026cash-flow statement, SEC EDGAR →

Net income is the accountant's number; owner earnings is the cash an owner could take out. The walk between them, off the cash-flow statement, and whether the gap is widening or holding.

In fiscal 2026 the business reported $14.2B of profit but $12.6B of owner earnings: $1.5B less than the profit line, taken out by capital spending and the timing of cash.

Reported net income$14.2B

Owner earnings$12.6B · 8% of revenue

	FY2026	FY2025	FY2024	FY2023	FY2022
Reported net income	$14.2B	$14.8B	$15.1B	$17.1B	$16.4B
Depreciation & amortizationnon-cash charge added back	+$3.5B	+$3.3B	+$3.1B	+$2.8B	+$2.9B
Stock-based compensationreal costnon-cash, but a real cost	+$522M	+$442M	+$380M	+$366M	+$399M
Working capital & othertiming of cash in and out, other non-cash items	−$1.9B	+$1.2B	+$2.6B	−$5.7B	−$3.1B
Cash from operations	$16.3B	$19.8B	$21.2B	$14.6B	$16.6B
Capital expenditurecash put back in to keep running and to grow	−$3.7B	−$3.5B	−$3.2B	−$3.1B	−$2.6B
Owner earnings	$12.6B	$16.3B	$17.9B	$11.5B	$14.0B
Owner-earnings marginowner earnings ÷ revenue	8%	10%	12%	7%	9%

Owner earnings is the cash an owner could pull out without starving the business: operating cash less the capital it must spend to hold its position . The cash-flow statement also adds stock comp back as non-cash, but it is a real cost paid in shares; counted as the expense it is (less $522M), owner earnings is nearer $12.1B.

Maintenance capex is estimated as depreciation where a growing business invests above it; free cash flow is the figure the scorecard's free-cash margin reads.

III

Quality & stewardship

Returns, the balance sheet, capital allocation, and pay.

Owner’s Scorecard

FY2026 10-K · source on SEC EDGAR →

Will it survive?

Can it pay its interest? 8.7×

Comfortable

Operating income $20.9B ÷ interest expense $2.4B

What this means
Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.
How heavy is the debt, net of cash? $49.9B · 2.4× operating profit

Meaningful net debt

Cash $1.4B + ST investments $6M − debt $51.3B

What this means
Netting $1.4B of cash and short-term investments against $51.3B of debt leaves $49.9B owed, about 2.4× a year's operating profit (2.5× on the gross debt, before the cash). Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.
How long is cash tied up? 60d

Long (60+ days)

DSO 12 + DIO 86 − DPO 38 days

What this means
Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.

Is it a good business?

Return on invested capital 40%

Very high (≥25%) through the cycle

10-yr median, range 25%–50%; 25% latest = NOPAT $15.9B ÷ invested capital $62.7B

Industry peers: median 26%

What this means
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; a return below the cost of capital (~8%) erodes value as a business grows rather than building it — the test Buffett weighs most. The headline is the median of the last 10 years (it ran 25% most recently), so one peak or trough year doesn't set the verdict. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
Owner-earnings margin 10%

Solid through the cycle

10-yr median margin, range 7%–12%; latest $12.6B = operating cash $16.3B − maintenance capex $3.7B

Industry peers: median 7%

What this means
What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 8% of revenue this year, a 10% median across 10 years. Treating stock comp as the real expense it is (less $522M of SBC) leaves $12.1B.
Are earnings backed by cash? 1.15×

Cash-backed

Cash from ops $16.3B ÷ net income $14.2B

What this means
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.

How is the cash used?

Where do the earnings go? 72%

Returns about half

Dividends + buybacks $9.2B ÷ Owner Earnings $12.6B

What this means
Of $12.6B Owner Earnings, $9.2B (72%) went back to shareholders, $9.2B dividends, $0 buybacks. Returning most of it is the mark of a mature business with little left to reinvest at a high return; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
Investing or harvesting? 1.05×

Maintaining

Capex $3.7B ÷ depreciation $3.5B

What this means
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Graham’s defensive tests · 4 of 6 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

Adequate size Pass

Revenue ≥ $2B · $164.7B

What this means
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
Strong liquidity Miss

Current ratio ≥ 2× · 1.06×

What this means
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
Conservative debt Miss

Debt ≤ working capital · $51.3B vs $2.0B WC

What this means
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
Earnings stability Pass

A profit every year (10-yr record) · no losses

What this means
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
Dividend record Pass

Uninterrupted dividends · paid every year (10)

What this means
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
Earnings growth Pass

Earnings +33% over the record · +59%

What this means
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
Moderate price —

P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price

What this means
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $14.74/share (latest year $14.20), the averaged base the calculator's gate runs on, and book value is $12.85/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2017–2026

Whether the record’s returns held, and what the capital reinvested earned.

Profitable years 10 of 10

What this means
Never lost money over the record, the earnings stability Graham insisted on.
Return on capital ≥ 15% 10 of 10 yrs

What this means
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
Operating margin 14% → 13% (3-yr avg ends)

In the filing’s words The margin has held, but the filing names price competition — the pressure is present even where the margin has absorbed it so far.

What this means
Through the cycle the operating margin held roughly steady — about 14% early, 13% lately, median 14%.
Reinvestment, incremental ROIC 21%

What this means
Every extra dollar the business reinvested came back at a high incremental return — the lens GBM read for a moat that reinvests rather than merely harvests. The record and the 10-K are where you check whether the rate holds.
Owner earnings growth +5%/yr

What this means
Owner earnings grew about 5% a year over the record.
Worst year 2026 · 12.7% op. margin

What this means
Stayed profitable even in its hardest year, the resilience that survives recessions.
Share count −2.4%/yr

What this means
The share count is shrinking, buybacks are quietly growing your slice of the business.
Dividend record rising

What this means
Paid and raised the dividend across the record, the continuity Graham prized.
How management talks about it Promotional

What this means
The record is compounding, but the filing leans on a promoter’s vocabulary rather than the per-share, return-on-capital terms an owner uses. The results back the talk here; the register is still worth noting.

Does AI threaten the moat?

Moderate contestability

AI is likely to reshape costs and some products here without clearly contesting or sparing the core moat; how the company itself frames it is the tell.

In its own filing A competitive risk, new this year

Its FY2026 10-K names artificial intelligence as a competitive threat, in language that was not in the prior year's filing.

“Online and other digital capabilities, as well as AI tools, facilitate competitive entry, price transparency, and comparison shopping, increasing the level of competition we face.”

The question is whether a moat the record shows as durable outlasts a technology that lowers the cost of part of what the firm sells. The durability is read in the record above, the filing's own framing of AI beside it; the industry label decides nothing on its own.

Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.

All figures as filed; the source filing is linked above.

Current Position

as of the latest quarter, May 3, 2026

Can the business pay what it owes this year, off the freshest balance sheet: the quality of the assets, the debt actually coming due, and what a low ratio means here.

Current assets$37.2B

Cash & short-term investments$1.6B
Receivables$6.6B
Inventory$27.3B
Other current assets$1.7B

Current liabilities$35.6B

Debt due within a year$1.0B
Accounts payable$14.4B
Other current liabilities$20.2B

Current ratio1.04×all current assets ÷ what's due · Graham looked for 2×

Quick ratio0.28×stricter: inventory excluded

Cash ratio0.05×strictest: cash alone against what's due

Working capital$1.6Bthe cushion left after near-term bills

Debt due this year vs. cash$1.0B due · $1.6B cash covered by cash on hand, no refinancing forced · both figures from the May 3, 2026 balance sheet

Revenue, latest quarter vs. a year ago+4.8%the freshest read on whether the business is still growing

Current ratio, recent quarters1.1× → 1.0×

Deeper floors

Tangible book value($18.8B)equity stripped of goodwill & intangibles

Net current asset value($56.9B)Graham's net-net: current assets less all liabilities

Debt incl. operating leases$60.1B$9.6B of it operating leases; with finance leases, “total fixed claims” below reaches $63.8B (annual-report basis)

Deferred revenue$1.6Bcustomer cash collected before delivery; operating float

From the company's latest filing.

Debt maturity

the debt note, SEC EDGAR →

Not how much it owes, but when it falls due, and against what. The ladder the company files, beside cash on hand and a year's owner earnings.

'26$4.7B

'27$3.6B

'28$3.1B

'29$3.9B

'30$2.1B

later$32.0B

Bars scaled to the largest single year; “later” is everything due after 2030, shown apart since it dwarfs the years.

Due in the next 12 months$4.7Bthe first rung: what must be repaid or rolled over within the year

Within two years$8.3Bthe near wall, the part most exposed to today’s credit conditions

Biggest single year$4.7Bin 2026the lumpiest maturity, where a refinancing, if needed, is largest

Total scheduled principal$49.4Bevery year plus what lies beyond, as the footnote totals it

Against what the business has and earns

Cash & short-term investments, May 3, 2026$1.6B

One year of owner earnings (FY2026)$12.6B

Together, against $4.7B due next year3.0×

Cash on hand as of May 3, 2026 plus a year’s owner earnings comes to $14.3B against the $4.7B due in the twelve months after the Feb 1, 2026 schedule: 3.0 times it.

Maturity schedule extracted from the company’s Feb 1, 2026 annual report and reconciled to the total the table states.

Lease obligations

the lease note, SEC EDGAR →

Debt by another name. What the business owes on the property, aircraft, stores and equipment it rents rather than owns is a fixed claim due on a schedule; added back to the debt, it is the true leverage. That ladder, operating and finance leases together, and what it adds to the debt on the page above.

Operating leasesFinance leases

'26$2.2B

'27$2.2B

'28$2.0B

'29$1.7B

'30$1.4B

later$5.8B

Lease payments by year, scaled to the largest; “later” is everything beyond year five, shown apart. These are the contractual cash payments, before the interest the filing imputes back out to the balance-sheet liability.

Due in the next 12 months$2.2Ba fixed cash payment, owed whether or not the business has a good year

Total lease payments$15.2Bevery year plus the tail, undiscounted: the full cash the leases will take

On the balance sheet$12.5Bthe present value of those payments, the recognised lease liability

True leverage: debt plus leases

On-balance-sheet debt$51.3B

Lease obligations (present value)$12.5B

Total fixed claims on the business$63.8B

Counting the leases the way Buffett does, the fixed claims on this business come to $63.8B, of which the leases are 20%. The lease wall above and the debt schedule together are the calendar of what must be paid, and when.

Lease ladder read from the ASC 842 tags in the company’s Feb 1, 2026 annual report and reconciled: the yearly buckets sum to the undiscounted total, which less the imputed interest equals the balance-sheet liability; a ladder that doesn’t tie out is withheld.

How the cash was used, 2017–2026

Over the record, the business generated $156.0B of operating cash; how management split it reads as a cash returner, paying most of what it earns straight back to owners.

Reinvested$27.2B · 17%
Dividends$66.0B · 42%
Buybacks$62.7B · 40%
Retained (debt / cash)$151M · 0%

Returned to owners$128.7B
100% of the owner earnings the business produced over the span, $66.0B as dividends and $62.7B as buybacks.
Source of fundingOperating cash
Operating cash covered reinvestment and returns; over the span debt rose $28.4B and cash and short-term investments fell $931M.
Average price paid for buybacks$219.24
Across the years where the filing reports a share count, 286M shares were bought for $62.7B, about $219.24 each. Year to year the price paid ranged from $129.81 (2017) to $329.09 (2022), and 2022, near the top of that range, was also its heaviest buyback year ($14.8B).
Net change in share count−19.3%
The diluted count fell from 1234M to 996M, so the buybacks outran the stock issued to staff.
Dividend record$9.20/sh
Paid in 10 of the years on record, the per-share dividend growing about 14% a year. It was never cut over the span.
Return on what it retained—
Not read here: owner earnings are negative over the span, or the company returned nearly all its earnings rather than retaining them, so there is too little retained to measure a return on.

Buybacks are gross of stock issued to staff; the share-count line above is the net of that, the figure that decides whether owners gained. The average price paid blends a year of purchases (and any accelerated repurchase), so it is close, not exact. The record of where the cash went and on what terms.

Acquisitions & goodwill

from the balance sheet & the 10-year cash-flow record

Goodwill grows only when a company acquires and falls only when it concedes it overpaid. The size of that bet, the cash put into buying rather than building, and how much has already been written off.

Goodwill & intangibles$32.7B31% of all assets; the premium carried on the balance sheet for businesses acquired

Against book equityexceeds itgoodwill alone is larger than the company’s entire book equity; stripped of the acquisition premium, there is no net book worth

Cash spent acquiring$33.2Bover 10 years buying other businesses, against $27.2B of capital spent building

None written down over the record; the goodwill is still carried at full cost. That is the deals holding their value on the books so far; whether they keep doing so is the test an owner watches, since the write-down, when it comes, is the admission the price was too high.

Goodwill, acquired intangibles and equity from the latest balance sheet; acquisition spend and write-downs summed across the 10-year record, from the company's own filings.

Management, ownership & pay

read the proxy →

From the proxy: how much of the business the people running it own, and how they are paid, beside what the business earned for its owners in the same years.

Fiscal year	Pay, as filed	“Actually paid”	Owner earnings
2022	$13.1M	$51.7M	$14.0B
2023	$14.6M	$7.5M	$11.5B
2023	$9.0M	−$2.9M	$11.5B
2024	$14.4M	$18.3M	$17.9B
2025	$15.6M	$20.0M	$16.3B
2026	$16.2M	$12.1M	$12.6B

Both pay figures are the company’s own, from the pay-versus-performance table its proxy statement files. “As filed” is the Summary Compensation Table total: salary, bonus, and equity awards at their value on the day of grant. “Actually paid” is the SEC’s prescribed recalculation, which re-marks those equity awards to what they became as they vested; it can swing far above or below the filed figure in either direction, and negative years occur. Owner earnings are the whole business's, from the record above, for the same fiscal years.

Insider ownership0.1%
The stake all directors and executive officers hold together, per the 2026 proxy: skin in the game, the first thing Munger reads.
CEO pay ratio427:1
What the chief earns for every dollar the median employee makes, per the 2026 proxy. A high ratio alone settles nothing; some businesses are genuinely top-heavy in scarce skill. A runaway figure is where Buffett starts asking whether the board is doing its job.
Stock-based compensation$522M
The slice of the business handed to employees in shares this year, 0% of revenue, equal to 2% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. One trap: the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.

Inverting the record

Invert: instead of why Home Depot Inc. is a good business, the question is what would make owning it a mistake, and whether those marks are in the record. Disconfirming tests across 2017–2026.

2 of the 6 tests turned up something to look into; the other 4 came back clean.

Look hereDid debt outgrow the business?$22.9B → $51.3B
Debt rose from $22.9B to $51.3B while owner earnings went from about $9.7B to $15.6B — about 2.4 years of owner earnings in debt then, about 3.3 now: measured against what the business earns, the balance sheet carries more debt than it did. Debt raised for buybacks or deals rather than growth is the kind that bites in a downturn.
Look hereDid receivables and inventory outpace sales?15% → 20% of sales
Receivables and inventory grew from $14.6B to $33.9B while revenue grew 76%: working capital is climbing faster than sales (15% of revenue then, 20% now). That can mean customers paying slower, stock building up, or revenue pulled forward. The filing's cash-flow and receivables notes say which.

And these came back clean

Is it less profitable than it was?
Did the share count rise anyway?
Did reported profit become cash?
Are "one-time" charges a yearly habit?

Each test is read from the filings and is noisy alone; a flag can mark a cyclical trough or a year of heavy investment as easily as a problem. The filing says which.

What an owner would ask, FY2026

read the 10-K →

Which reported numbers are a judgment call?
Management names Inventory, Acquisitions as critical estimates
each rests partly on management's judgment; the filing's note sets out the assumptionsverify →

The questions the record and the charts do not answer on their own; each carries the figure and the place to look.

Peers, Specialty Retail

The same industry, side by side on owner economics. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.

Company	Revenue	Gross margin	Op. margin	ROIC	Owner earn. margin
HDHome Depot Inc.	$164.7B	34%	14.3%	41%	10%
LOWLowe's Cos Inc.	$86.3B	33%	10.6%	33%	7%
SHWSherwin-Williams Company (The)	$23.6B	46%	15.9%	23%	11%
TSCOTractor Supply Company	$15.5B	35%	9.5%	31%	7%
BLDRBuilders FirstSource	$15.2B	28%	5.9%	16%	5%
FASTFastenal Company	$8.2B	46%	20.2%	30%	12%
FNDFloor & Decor	$4.7B	42%	7.7%	16%	6%
Group median	—	35%	10.6%	30%	7%

The price

What a price has to assume.

What the price implies

reverse-DCF

Type today's close and see the owner-earnings growth you'd have to believe to justify it, beside what Home Depot Inc. has delivered.

Today’s price $

Through the cycle, Home Depot Inc. earns about $16.4B on its 9.9% median owner-earnings margin. This year’s 7.7% margin runs below that; the reported figure may understate a lean year. Normalize, below, values the price on that through-cycle figure rather than the latest year.

Base Normalize · through-cycle ($16.4B) Net of stock comp (−$530M)

—

The assumptions Required return 9% Years of high growth 10 Terminal growth 2.5%

9.0% = the 4.55% 10-year Treasury (Jul 15, 2026) + 4.45 points of equity premium. The rate you require is yours to set.

Enter a price above to run it.

Implied by the price—

Owner-earnings growth · ’22→’26+3%/yr

Owner-earnings growth · ’17→’26+5%/yr

Owner-earnings yield—

P/E (3-yr earnings ’24–’26)—

P/B—

Graham’s price gate—

Graham capped the multiple at 15×; Buffett and Munger let that rule go: a wonderful business can deserve 50× if the thesis holds. The gate marks the bargain-hunter's floor.

Against a high-grade bond: Graham’s yardstick bond yield%

Prefilled with the 10-year Treasury (4.55%, as of Jul 15, 2026). Edit it for today’s exact figure, or a AAA corporate yield.

Graham measured a stock against the bond you could own instead, the heart of his margin of safety. Enter a price above to weigh the owner-earnings yield against this bond.

Owner earnings $14.3B on 997M shares outstanding, per the 10-Q cover, as of 2026-05-19; net debt $49.7B. The base is the latest year by default; Normalize values it on the through-cycle median owner-earnings margin (to avoid paying on a peak year). Net of stock comp treats option pay as the expense it is. The dials set the multiple a growth belief justifies; the price, and every dollar on this page, is yours.

Weigh HD against another business →

The owners of HD: the meeting and the votes →

Cite: Owner Scorecard, "Home Depot Inc. (HD), the owner's record," https://ownerscorecard.com/c/HD, data as of 2026-07-09.

Manual order: ← HCSG its page in the Manual HE →

Industry order: ← HBI the Specialty Retail chapter HERE →