Home Depot (HD) Financials

Home Depot’s latest quarter showed solid earnings and strong cash generation, but revenue growth remained modest and the balance sheet is more leveraged than it was a year ago. For the fiscal first quarter of 2026, the company continued to produce substantial operating cash flow, while keeping margins fairly stable and maintaining its long-running dividend payout.

• Operating cash flow was strong at $6.03 billion in Q1 2026, up from $4.33 billion in Q1 2025, showing Home Depot still converts earnings into cash efficiently.
• Net income rose to $3.29 billion from $3.43 billion a year ago in the comparable quarter, with EPS of $3.30 versus $3.45 last year on a diluted basis, reflecting stable profitability despite a tougher environment.
• Gross profit improved to $13.78 billion from $13.46 billion in Q1 2025, suggesting the company held up well on product margins.
• Free cash generation remained healthy even after capex of $844 million and acquisitions of $286 million, leaving the company with positive net cash change for the quarter.
• Home Depot continued to support shareholders with a meaningful dividend; cash dividends paid were $2.32 billion, or $2.33 per share in the quarter.
• Revenue increased to $41.77 billion from $39.86 billion in Q1 2025, a sign that sales trends improved year over year.
• Operating expenses stayed well controlled at $8.80 billion, up from $8.33 billion a year ago, but not rising faster than revenue.
• Depreciation and amortization remain sizable at $910 million and $171 million respectively, which is normal for a mature retailer with a large store base.
• Inventory rose to $27.28 billion from $25.76 billion a year ago, which may reflect stocking ahead of demand but also ties up more working capital.
• Balance sheet equity dropped sharply to $13.87 billion from $7.95 billion in Q1 2025? Wait, the latest quarter actually shows equity improved versus Q1 2025, but it remains thin relative to liabilities; common equity was only about $13.9 billion against $94.0 billion in liabilities.
• Total liabilities were $94.03 billion, including $44.83 billion of long-term debt and $8.68 billion of short-term debt, so leverage remains an important risk factor.
• Interest expense is still significant at $611 million in the quarter, which limits earnings growth and reduces financial flexibility.
• Investing cash flow was negative $1.11 billion in Q1 2026, and the company also used cash for acquisitions, which adds to capital demands.

Longer-term trend: Over the last four years, Home Depot has remained highly profitable and consistently cash-generative, but sales growth has been uneven and debt levels have stayed elevated. Revenue in Q1 2026 was above Q1 2025, and quarterly operating cash flow has generally held in the $3.8 billion to $6.0 billion range, which supports the dividend and ongoing store/technology investment.

Bottom line: Home Depot still looks like a durable, high-quality retailer with strong cash flow and dependable earnings power. The main things investors should watch are margin trends, inventory levels, and whether the company can keep growing sales without leaning too heavily on debt.