The Home Depot, Inc. (HD): investment thesis checklist
What a value investor writing down why they own The Home Depot, Inc. would be relying on, read from its filings: the figures that have carried the business, the lines a reader might set on them, and the published tests it meets today. A list to write against, not a view on the company.
1. The figures the case would rest on
- Return on invested capital: 19.9% in FY2025; between 19.9% and 46.5% over 10 filed years, median 34.3%. Does the thesis need it to stay inside that range?
- Return on equity: 110.5% in FY2025; between 110.5% and 1450.5% over 7 filed years, median 390.0%. Does the thesis need it to stay inside that range?
- Free cash flow yield: 3.4% in FY2025; between 3.4% and 5.6% over 10 filed years, median 4.3%. Does the thesis need it to stay inside that range?
- EV to EBIT: 21.05x in FY2025; between 14.28x and 21.96x over 10 filed years, median 18.20x. Does the thesis need it to stay inside that range?
- Price to earnings: 26.32x in FY2025; between 18.95x and 28.43x over 10 filed years, median 23.09x. Does the thesis need it to stay inside that range?
- Gross margin: 33.3% in FY2025; between 33.3% and 34.3% over 10 filed years, median 33.8%. Does the thesis need it to stay inside that range?
- Operating margin: 12.7% in FY2025; between 12.7% and 15.3% over 10 filed years, median 14.3%. Does the thesis need it to stay inside that range?
- Net debt to EBITDA: 2.74x in FY2025; between 1.37x and 2.74x over 10 filed years, median 1.87x. Does the thesis need it to stay inside that range?
- Revenue growth, 5-year CAGR: 4.5% in FY2025; between 4.5% and 9.8% over 10 filed years, median 6.8%. Does the thesis need it to stay inside that range?
- Share count change: 0.2% in FY2025; between -4.0% and 0.2% over 10 filed years, median -2.7%. Does the thesis need it to stay inside that range?
2. What must stay true: guardrails a reader might set
Each line is drafted from The Home Depot, Inc.'s own current figure, never from a level we think a business should clear, and replayed over its filed years. They are a reader's to keep, edit or drop.
Debt to Equity stays at or below 6.66x
Today 5.33x. Replayed over 7 filed years, it would have broken in 5; most recently FY2024, at 9.84x (10-K, filed 2025-03-21).
Return on Invested Capital stays at or above 16%
Today 19.94%. This indicator depends on inputs (market price, multi-statement composites) whose history is not deep enough to re-derive it with the same formula as the live value, so no honest retro-test exists for it.
Dividend Rate stays at or above $9.22
Today $9.32. This indicator depends on inputs (market price, multi-statement composites) whose history is not deep enough to re-derive it with the same formula as the live value, so no honest retro-test exists for it.
3. What would break it
- A filed year in which debt to equity rose above 6.66x.
- A filed year in which return on invested capital fell below 16%.
- A filed year in which dividend rate fell below $9.22.
4. The published tests it meets today
Of 30 tests value investors published: 2 met, 28 not met, 0 we could not complete. Counts, never a score.
Meets: ROIC at or above WACC; Cash-covered dividend.
What this cannot tell you
What the numbers say today, not the day one stops being true. The reasons are not written down.
An account adds
One email the night a number you wrote down breaks. Silence otherwise.
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How this is computedA computation on accounts filed with the SEC, not a recommendation and not advice. Past filings do not indicate future results. Risk disclaimer.