Key Takeaways
- Home Depot’s diluted share count has risen for eight straight quarters, from 993 million to 996 million, after falling from 1.08 billion over the four years before that.
- Net debt stood at $61.10 billion last quarter against $59.12 billion in the same quarter a year earlier, and leverage on that comparable quarter rose from 1.82x to 1.94x.
- Return on invested capital came in below the year-ago period in each of the last four quarters, and management’s own measure was 24.8% last quarter against 27.2%.
Home Depot Quietly Stopped Shrinking Its Own Share Count
The Goldman Sachs’ retail analyst, Kate McShane’s question was housekeeping. Partway through the Goldman Sachs consumer conference on September 15, she asked Home Depot’s CFO when buybacks return. Richard McPhail answered it as routine: leverage to 2.0x by the middle of fiscal 2027, repurchases by the end of the second quarter. Then the room moved on to AI.
Almost nobody wrote it up. The tariff refund had the headlines, and the $685 million running through cost of goods sold was a livelier argument.
But the buyback line is the one that shows up in the numbers. TIKR’s data puts Home Depot’s weighted average diluted share count at 1.08 billion for the year ended January 2021. Four years later it was 993 million, roughly 90 million shares retired, quietly doing a chunk of the work in every EPS chart.
That engine has not just stalled. Over the last eight quarters the count has climbed every single period, from 993 million to 996 million. With repurchases paused, stock compensation adds shares instead, and the tailwind has become a small headwind.
That reframes the guidance. Home Depot grew sales 5.7% last quarter and still expects earnings per share between flat and up 4% for the year.
What Home Depot Bought With That Capital
The money went somewhere specific, and the strategy behind it is not obviously wrong. SRS in 2024 and GMS in 2025, plus smaller deals like Mingledorff’s, built a wholesale distribution arm aimed at the roughly $700 billion Pro half of its addressable market. Pro comps have been positive for eight consecutive quarters, SRS comped above the company average, and management expects $400 million of cross-selling this year.
The bill arrived on the balance sheet. Net debt sat at $59.12 billion in the July 2025 quarter, jumped to $64.30 billion as GMS closed, peaked at $64.52 billion, and has since eased to $61.10 billion. That is still above the year-ago figure. Measured against the same seasonal quarter, net debt to EBITDA went from 1.82x to 1.94x. Management’s 2.0x goal is a trailing measure, so these readings are not a scorecard against it, but the direction is wrong.
Returns moved the same way. Home Depot’s return on invested capital was 38.16% for the year ended January 2022, and 26.88% three years later. The quarterly series is below its year-ago comparison in each of the last four periods, including 6.61% in the July quarter against 7.04% a year earlier. Management’s own figure was 24.8% last quarter, down from 27.2%.
Working capital changed too. Distributors extend trade credit and carry deeper inventory, and Home Depot now does both. Days sales outstanding went from 5.91 to 12.57, and the cash conversion cycle from 31.4 days to 53.4.
Not all of that is the acquisitions. A housing market with mortgage costs near 6.7% and four years of record-low turnover is doing damage of its own, with comparable transactions down 1.0% last quarter against average ticket up 2.8%.
The Question Is What Comes Back, and When
None of this makes the Pro strategy a mistake. Home Depot is taking share in a shrinking sector, and the delivery buildout behind it is genuine.
But the arithmetic on the buyback is tighter than a one-minute answer suggests. Net debt has fallen about $3.4 billion from its peak across two quarters, against roughly $2.3 billion of dividends paid every quarter and capital expenditures running at 2.5% of sales. Getting to 2.0x on a trailing basis by the middle of fiscal 2027 needs EBITDA to cooperate, in a year management calls volatile.
The shape of the return has changed. For a decade this was a company that compounded at high rates on capital while handing cash back every quarter. It now runs lower returns, finances receivables, and pays down debt instead of buying stock. At $298.62 and a 2.9% dividend yield, holders are paid to wait, but the waiting is the investment case.
Two things settle it. Whether repurchases resume on schedule by the end of the second quarter of fiscal 2027, and whether return on invested capital stops falling year over year once GMS is in the base. A ticket-led comp against falling transactions is not a durable growth engine, and the buyback used to cover for that.
Should You Invest in The Home Depot, Inc.?
The only way to really know is to look at the numbers yourself. TIKR gives you free access to the same institutional-quality financial data that professional analysts use to answer exactly that question.
Pull up HD stock and you’ll see years of historical financials, what Wall Street analysts expect for revenue and earnings in the quarters ahead, how valuation multiples have moved over time, and whether price targets are trending up or down.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
