Is HD a Buy? What to Consider in 2026
Short answer
The bull case for The Home Depot (HD) rests on Pro contractor ecosystem buildout: Professional contractors now account for more than half of Home Depot's sales, and the company is investing heavily to capture more of their total project spend. Revenue (Fiscal 2025, ended Feb 1, 2026) is ~$164.7 billion. If you believe that thesis holds, the real questions become position sizing and overlap, not timing. The main risk to that view: The most direct risk is a prolonged freeze in the US housing market: low inventory, elevated mortgage rates, and high home prices have kept transaction volumes near multi-decade lows, directly suppressing demand for the large remodeling projects that drive Home Depot's highest-ticket sales. Whether HD is a buy comes down to whether you believe the thesis. This is informational, not a recommendation, and Walnut is not an investment adviser.
The Home Depot, Inc. is the world's largest home improvement retailer, operating approximately 2,300 stores across the United States, Canada, and other locations in North America. The company sells building materials, home improvement products, lawn and garden supplies, and provides installation and tool-rental services to two main customer groups: do-it-yourself homeowners (DIY) and professional contractors (Pros). Revenue is generated almost entirely through retail store sales and, increasingly, through digital channels (online sales reached 15.9% of total revenue in fiscal 2025) and through its specialty trade distribution arm, SRS Distribution, which serves Pros directly with roofing, landscaping, pool supplies, and now drywall and steel framing products following the September 2025 acquisition of GMS Inc. The company earns a gross margin of roughly 33% and an operating margin in the low-to-mid teens, with strong free cash flow that funds a steadily growing dividend (156 consecutive quarterly payments as of early 2026) and periodic share repurchases. Home Depot was founded in Atlanta in 1978 by Bernie Marcus and Arthur Blank, grew to $1 billion in annual sales by 1986, and has compounded into one of the largest retailers in the world. Ted Decker has served as Chair, President, and CEO since 2022, steering the company through a post-pandemic demand normalization and toward a Pro-centric strategy branded around deepening wallet share with contractors. The fiscal 2024 acquisition of SRS Distribution was the largest in company history, and the follow-on GMS acquisition in 2025 for approximately $5.5 billion accelerated that trajectory. Richard McPhail serves as Chief Financial Officer. The company is a component of the Dow Jones Industrial Average and the S&P 500.
What's the case for buying HD?
Pro contractor ecosystem buildout
Professional contractors now account for more than half of Home Depot's sales, and the company is investing heavily to capture more of their total project spend. The acquisitions of SRS Distribution (2024) and GMS Inc. (completed September 2025 for approximately $5.5 billion) added over 1,200 specialty distribution locations across 48 US states and six Canadian provinces, covering roofing, landscaping, pool supplies, drywall, ceilings, and steel framing. Cross-selling synergies between the retail stores and the SRS network, an enterprise trade-credit program, and dedicated Pro sales forces represent a multi-year revenue ramp that does not depend solely on housing turnover.
Pent-up housing demand and a potential mortgage rate cycle turn
Housing turnover has remained near historical lows since 2023, suppressing demand for large remodeling projects. Homeowners are sitting on an estimated $11 trillion in tappable equity (roughly double the 2019 level), creating significant latent demand that could be unlocked if mortgage rates moderate. Any meaningful improvement in housing affordability and transaction volumes would likely translate directly into accelerated comparable-store sales growth for Home Depot, given its dominant market position.
Digital and omnichannel momentum
Online sales reached 15.9% of total revenue in fiscal 2025 and were growing at a high-single-digit rate. Home Depot is integrating digital ordering, next-day delivery, and click-and-collect services across both its retail and distribution networks. This omnichannel capability is increasingly important in the Pro segment, where fast, reliable fulfillment of job-site materials is a key competitive differentiator.
Durable dividend and capital return track record
Home Depot has paid a cash dividend for 156 consecutive quarters as of early 2026, and the board raised the quarterly dividend by 1.3% to $2.33 per share (an annualized $9.32) alongside its fiscal 2025 results. The dividend yield is approximately 2.5%, above the specialty-retail industry average, and the payout is covered by both earnings and operating cash flow. Management has signaled an intent to resume share repurchases once the company returns to a net-cash position, anticipated in the first half of 2027.
What are the risks to HD?
The most direct risk is a prolonged freeze in the US housing market: low inventory, elevated mortgage rates, and high home prices have kept transaction volumes near multi-decade lows, directly suppressing demand for the large remodeling projects that drive Home Depot's highest-ticket sales. Tariffs on imported goods (a significant portion of Home Depot's product mix is sourced internationally) could compress margins or require price increases that dampen consumer demand, even as management has worked to diversify its supply chain. The SRS and GMS acquisitions added substantial long-term debt to the balance sheet and pushed ROIC down to approximately 25.7% from 31.3%, and integration execution risk remains elevated while buybacks are paused. Finally, the stock trades at a P/E of roughly 23x, a premium to the broader retail industry, which leaves limited margin for error if earnings guidance is revised lower.
How is HD valued? (as of 2026-06-27 (fiscal 2025 results as reported February 24, 2026; P/E as of June 9, 2026))
- Revenue (Fiscal 2025, ended Feb 1, 2026): ~$164.7 billion
- Net Earnings (Fiscal 2025): ~$14.2 billion
- Diluted EPS (Fiscal 2025): $14.23 (adjusted: $14.69)
- Gross Margin (Fiscal 2026 guidance): ~33.1%
- Operating Margin (Fiscal 2026 guidance): ~12.4% to 12.6%
- P/E Ratio (TTM): ~22.95x
- Annual Dividend Per Share: $9.32 (~2.5% yield)
- Comparable Sales Growth (Fiscal 2025): +0.3%
Home Depot grew total revenue 3.2% in fiscal 2025, but most of that growth came from the SRS and GMS acquisitions rather than organic comparable-store performance, which was essentially flat at +0.3%. Profitability softened modestly as acquisition-related costs, higher debt service, and integration expenses weighed on margins and pushed ROIC down from 31.3% to approximately 25.7%. The stock's trailing P/E of roughly 23x sits near its 10-year historical average and above the peer group, reflecting investor confidence in the long-term Pro strategy but leaving limited cushion if the housing market remains depressed longer than expected.
How do you decide if HD is a buy?
Rather than asking whether HD is a buy in the abstract, it tends to help to answer four questions:
- Thesis: do you believe the case above, and is it still true today?
- Time horizon: a single stock can be volatile, so a longer horizon absorbs more of the swings.
- Position sizing: a thesis can be right and the sizing still wrong; decide how much of your portfolio one name should be.
- Overlap: check whether you already hold HD indirectly through an index or sector ETF before adding more.
For the full picture, see the HD stock guide (what the company does, the ETFs that hold it, similar stocks, and the themes it fits). In Walnut you can ask its AI about HD against your real portfolio and see your actual exposure before deciding.
The bottom line on HD
The bottom line: The Home Depot's story right now is Pro contractor ecosystem buildout, with revenue (fiscal 2025, ended feb 1, 2026) at ~$164.7 billion. If you believe that narrative continues, the call is about sizing HD sensibly and checking overlap with what you own; if you doubt it (the risk: the most direct risk is a prolonged freeze in the US housing market: low inventory, elevated mortgage rates, and high home prices have kept transaction volumes near multi-decade lows, directly suppressing demand for the large remodeling projects that drive Home Depot's highest-ticket sales.), it is not for you. Decide from the thesis, not the ticker. Walnut is not an investment adviser.
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FAQ
Is HD a good stock to buy right now?
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The case for The Home Depot right now is Pro contractor ecosystem buildout, with revenue (fiscal 2025, ended feb 1, 2026) at ~$164.7 billion. If you believe that thesis holds, HD is a way to own it and the real questions are sizing and overlap, not timing; the main risk to that view is the most direct risk is a prolonged freeze in the US housing market: low inventory, elevated mortgage rates, and high home prices have kept transaction volumes near multi-decade lows, directly suppressing demand for the large remodeling projects that drive Home Depot's highest-ticket sales. So it comes down to whether you believe the thesis. Walnut is not an investment adviser and this is not a recommendation.
What does The Home Depot do?
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The Home Depot, Inc.
What are the main risks of HD?
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The most direct risk is a prolonged freeze in the US housing market: low inventory, elevated mortgage rates, and high home prices have kept transaction volumes near multi-decade lows, directly suppressing demand for the large remodeling projects that drive Home Depot's highest-ticket sales. Tariffs on imported goods (a significant portion of Home Depot's product mix is sourced internationally) could compress margins or require price increases that dampen consumer demand, even as management has worked to diversify its supply chain. The SRS and GMS acquisitions added substantial long-term debt to the balance sheet and pushed ROIC down to approximately 25.7% from 31.3%, and integration execution risk remains elevated while buybacks are paused. Finally, the stock trades at a P/E of roughly 23x, a premium to the broader retail industry, which leaves limited margin for error if earnings guidance is revised lower.
What does Home Depot do?
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Home Depot is the world's largest home improvement retailer, operating roughly 2,300 stores in North America. It sells building materials, hardware, appliances, lawn and garden products, and offers installation and tool-rental services. The company serves both do-it-yourself homeowners and professional contractors, with professionals now accounting for more than half of total sales. It also operates SRS Distribution and GMS, specialty trade distributors serving contractors directly.
Is HD a good stock to buy right now?
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That depends on your time horizon and existing portfolio. HD offers exposure to the US housing cycle through the world's dominant home improvement retailer, a growing Pro-contractor distribution network, and a reliable dividend with a roughly 2.5% yield. However, comparable-store sales growth has been nearly flat since 2023, the stock trades at roughly 23x trailing earnings, and earnings are expected to grow only modestly in fiscal 2026. Whether those dynamics suit your goals is a personal decision.
Does HD pay a dividend?
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Yes. Home Depot has paid a cash dividend for 156 consecutive quarters as of early 2026. The board raised the quarterly dividend 1.3% to $2.33 per share in February 2026, equating to an annualized $9.32 per share. The current yield is approximately 2.5%, above the specialty-retail industry average. The dividend has grown at an average of roughly 15% per year over the past decade and is covered by both earnings and operating cash flow.
Who are Home Depot's main competitors?
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Lowe's is the closest direct competitor, with about $86 billion in annual sales and a similar store footprint. In e-commerce, Amazon and Wayfair compete for online home improvement spend. In the professional trade distribution channel, Home Depot's SRS and GMS subsidiaries compete with regional specialty distributors. Warehouse clubs like Costco and mass retailers like Walmart compete on overlapping commodity categories at the lower end of the assortment.
Walnut is informational and is not an investment adviser. This page is educational and not a recommendation to buy or sell HD; figures are approximate and dated, and your own situation, time horizon, and risk tolerance should drive any decision. Verify current data before investing.