Buffett Brain · Research note
Score updated 22 Oct 2026 · analysis from 1 Jun 2026
HD· Consumer Discretionary
Home Depot
Home Depot is a wonderful retailer at a price that asks you to pay 22.8 times earnings for shrinking profits.
Buffett fit
Partial fit
Owner
64
Durability
67
Management
40
Price
40
Score updated 22 Oct 2026 · analysis from 1 Jun 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Consumer Discretionary stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If I owned the whole company at today's price, I would be handing over my cash for a 3.95 percent owner-earnings yield.
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The franchise itself is durable. People will always need lumber, paint, and a place to fix a leaking faucet, and a 27.6 percent five-year tells you this is a genuinely good business.
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Management buys back stock steadily, shrinking the share count 1.5 percent a year, which I like.
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There is no here. At 22.8 times earnings and an EV-to- of 18.3, you are paying a full price, and the 3.95 percent owner-earnings yield is thin against a long Treasury.
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
6- 1Excellent returns on capital, with a five-year of 27.6 percent and a current 19.1 percent that prove a real competitive edge.
- 2Wide 33.1 percent and a healthy 12.4 percent from sheer purchasing scale.
- 3Steady share-count reduction of 1.5 percent a year returns ownership to remaining holders.
- 4Strong cash quality, with at 89.3 percent of net income, so reported profits are largely real.
Concerns
7- 1The valuation is expensive: 22.8 times earnings and 18.3 times EV-to- for a business whose earnings are shrinking, leaving only a 3.95 percent owner-earnings yield.
- 2Earnings per share have gone backwards at minus 2.2 percent a year, so you are paying a growth price for no growth.
- 3Revenue is nearly flat at 2.2 percent annual growth, well below what a premium multiple implies.
- 4The balance sheet is heavily levered at 4.55 times , which flatters returns and raises risk.
Price history
$314-14.2%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Home Depot sells lumber, tools, appliances, and building supplies through big-box stores to do-it-yourself homeowners and, increasingly, to professional contractors. It earns a 33.1 percent and a 12.4 percent by buying in scale and moving enormous volume, but revenue is barely growing at 2.2 percent a year and earnings per share have actually gone backwards at minus 2.2 percent.
How this analysis has moved
The call has held across 5 reviews.
Sep 27, 2026 → Oct 22, 2026
What other investors would say
The same company, judged by three other documented playbooks.
Keep researching
Similar companies in Consumer Discretionary
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