Company DCF analysis file
Home Depot DCF Analysis
A Home Depot DCF should distinguish established-store trading from growth bought through acquisitions. FY2025 sales increased while operating profit declined. Inventory, supplier funding and the cash paid for acquired businesses must all fit the same operating and investment case.
Revenue, expenses and profit on one annual basis
Historical Home Depot consolidated comparison, $ millions: FY2024 ended 2025-02-02 and FY2025 ended 2026-02-01. These annual periods are separate from the later interim observation below.
| Measure | FY2024 | FY2025 |
|---|---|---|
| Net sales | 159,514 | 164,683 |
| Cost of sales | 106,206 | 109,818 |
| Gross profit | 53,308 | 54,865 |
| Selling, general and administrative | 28,748 | 30,702 |
| Depreciation and amortization | 3,034 | 3,273 |
| Operating income | 21,526 | 20,890 |
| Interest expense | 2,321 | 2,412 |
| Net earnings | 14,806 | 14,156 |
Source: Annual financial statements. Annual values are reported unless a row is marked derived.
The fiscal labels do not match calendar-year ends: FY2025 ended February1,2026. FY2024 contained 53 weeks versus 52 in FY2025. Higher reported sales therefore need a calendar and acquisition bridge before an organic-growth claim. Operating expense grew faster than gross profit in these annual amounts.
Separate the sales growth question from acquisition funding
| FY2025 measure | Observed value | Interpretation |
|---|---|---|
| Consolidated net sales | $164,683 million | All businesses within reported consolidation |
| Comparable-sales change | +0.3% | Equivalent 52-week defined comparison |
| GMS acquisition date | 2025-09-04 | Part-year contribution, not an unchanged full-year business |
| Net businesses-acquired cash | $5,410 million | Investment funding, not comparable-store demand |
Source: Annual business disclosures and financial notes. Annual values are reported unless a row is marked derived.
The issuer comparable-sales definition differs from total sales and typically admits acquisitions only after more than 52 weeks. Do not subtract the comp percentage from group growth and label the remainder acquired revenue. Each measure uses its own population and denominator.
Reconcile reported cash before forecasting investor cash
| Measure | FY2025 |
|---|---|
| Operating cash | 16,325 |
| Capital expenditures: positive deduction | 3,679 |
| Operating cash less capex: derived | 12,646 |
| Net businesses-acquired payments: separate deduction | 5,410 |
| Remainder after those two investment lines: derived | 7,236 |
Source: Annual cash-flow statement and related notes. Annual values are reported unless a row is marked derived.
The cash bridges are 16,325 minus 3,679 = $12,646 million, then 12,646 minus 5,410 = $7,236 million. These are selected subtotals before other investing and financing, not a claim of cash after every obligation. Acquired earnings need a purchase-funding treatment consistent with the forecast.
The later interim period stays separate
| Observation | Period-specific evidence |
|---|---|
| Reported period basis | Q2 FY2026 covers 2026-05-04 through 2026-08-02 and was released 2026-08-18. Revenue was $47,861 million in this quarter. |
| Interpretation boundary | FY2025 ended in February 2026. Group sales, comparable sales and acquired-business contributions have different populations; higher reported sales do not establish the return on acquired operations or remove housing-cycle sensitivity. |
Source: official reporting for the stated period. The dated quarter is not annualized here and is not added to either full-year column. Later reporting must be checked before refreshing the valuation date.
Turn the statements into a DCF operating case
Build store and professional-customer demand, realized margin, staffing and distribution costs. Reconcile opening inventory, purchasing, cost of sales and vendor payments; acquired inventory is a perimeter change rather than ordinary cash purchasing. Apply operating taxes, noncash costs and recurring capex, then keep acquisitions and lease/debt claims separate in the investor and equity bridges.
| Driver | Evidence to carry into the forecast | Downside condition to test |
|---|---|---|
| Comparable trading | Transactions, ticket and merchandise margin | Slower demand leaves committed stock receipts unchanged |
| Professional distribution | Comparable acquired scope and fulfillment costs | Partial-year acquired growth is projected as organic |
| Inventory funding | Stock availability, markdowns and supplier dates | Cash release sacrifices more contribution than it saves |
Compare slower trading with fixed stock commitments against a deliberate reduction in purchasing that includes availability and markdown consequences. Distinguish maintaining the existing store network from buying future earnings. Terminal cash must sustain the same operating perimeter and service level assumed in the forecast.
Use the Home Depot financial analysis for the broader operating context, the company forecast to state the operating assumptions, and the DCF calculator only after defining the investor cash stream. Keep the statement definitions, reporting dates and your own assumptions visible when comparing valuation cases.
Company analysis