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Back of Napkin

The Home Depot, Inc. HD

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Home Depot has not had a quarter of positive customer transactions in over a year. Every comparable-sales figure it has reported since has been carried entirely by people spending more per visit.

It also stopped buying back its own stock in March 2024 and has not restarted, while carrying $52.9B of debt.

HD · price with moving averages

Daily · 6MWeekly · 3Y
$264$309$354$399$444 Sep '23Apr '24Nov '24Jun '25Jan '26Aug '26 BID
EMAs82140

Source: market data.

The business

Home Depot sells lumber, appliances, tools, paint and building materials out of 2,364 warehouse stores, to homeowners doing their own projects and to professional contractors doing other people's. The professional customer is the strategic priority and the reason for the SRS Distribution and GMS acquisitions, which added roughly 1,340 specialty distribution locations serving roofers and interior contractors.

Demand is a function of housing turnover and interest rates rather than anything the company controls. People renovate when they move, and they have not been moving.

Inside the complete Back of Napkin

  1. 01The business
  2. 02The numbers
  3. 03Management
  4. 04How it fails or surprises you
  5. 05The shape of the payoff
  6. 06Closing thoughts
  7. 07Methodology

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