The Home Depot, Inc.
Consumer Discretionary · Home Improvement Retail
Cyclical read on US housing turnover and Pro contractor spend, not a secular growth story. Comp sales have run negative for 8 consecutive quarters as existing-home sales sit near 30-year lows and high mortgage rates lock homeowners into low-rate refis.
25B deal, closed 2024) accelerates the Pro pivot - adds ~$10B revenue and pulls Pro mix toward 50%+, but dilutes operating margin near-term (SRS runs ~9% vs HD core ~14%).
- Housing turnover trough - every 100bps drop in mortgage rates historically lifts existing-home sales 10-15%
- SRS pulls Pro mix higher; Pro spends 2-3x DIY per ticket, lower churn
- Aging US housing stock (median age ~40 yrs) + remodel deferral creates pent-up demand
- Buyback + dividend yield ~2.5%; capital return resilient through cycle
- Operating margin floor ~13% even at trough comps; structural advantage vs $LOW
- Comp sales negative 8Q running; no inflection visible until rates ease
- SRS goodwill ($12B+) at risk if Pro construction softens with builder backlogs working off
- Tariffs on China-sourced building products squeeze gross margin
- Big-ticket discretionary (appliances, flooring) down double-digits YoY
No major news in the last 7 days for HD - only listicles and opinion pieces, which we filter out by default. See everything anyway.
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