What Would Flat Store Sales Do To Home Depot Stock?
Investors who own Home Depot (HD) worry that sales at existing stores will stop growing. That worry is hardly far-fetched. On August 18, the home improvement retailer reported that comparable sales, its measure for existing stores, rose 1.7% in the quarter, with just 1.3% growth in its U.S. stores. That same day, management reaffirmed its forecast for fiscal 2026, which puts comparable sales growth at 0% to 2%. A flat year sits at the bottom of that range. What would a flat year actually cost Home Depot?
Image from PixabayWhat A Flat Year Would Cost Home Depot
Home Depot recorded $165 billion in sales during its last full fiscal year, which ended in February 2026. Applied to those sales, the 1% comparable growth at the middle of management’s range is worth up to about $1.65 billion, which a flat year would forgo. A shortfall of that size would dent the year, but not the company.
Profit has faced even more pressure than sales. Although Home Depot saw sales grow 2.5% over the twelve months to August 2026, its operating income slipped anyway, dropping to $21.0 billion from $21.6 billion a year earlier. That slide occurred over the three prior quarters. The latest quarter proved firmer, with operating income rising to $6.84 billion from $6.56 billion a year earlier. Still, Home Depot’s twelve-month operating margin of 12.4% is the lowest recorded at any quarter-end in ten years. The bottom of management’s operating margin forecast for fiscal 2026, 12.4%, matches that low.
How Well Could Home Depot Absorb A Flat Year?
Home Depot’s cash flow certainly has room to absorb a flat year. The company generated $15.1 billion of free cash flow over the twelve months to August, compared against $9.22 billion paid in dividends. During that period, the company bought back no shares.
Management also expects growth beyond the existing stores, and its plan includes new stores. The forecast for fiscal 2026 puts total sales up 2.5% to 4.5%, running ahead of the range for comparable sales. Separately, during its last full fiscal year, Home Depot’s main segment slipped 0.7% to $152 billion, while the business it reports as Other nearly doubled to $12.7 billion.
Debt presents a weaker side: Home Depot owed $52.9 billion in debt at the start of August, plus $9.7 billion of operating lease liabilities, while carrying just $2.09 billion of cash. Even so, the company maintained an operating income that was 8.7 times its interest expense over the twelve months to August.
The stock is another vulnerability, as it has fallen harder than the market before. During the 2022 inflation shock, Home Depot stock fell 34%, compared to a 24% drop for the S&P 500.
What Would Show Home Depot’s Store Sales Stalling?
When Home Depot delivers its next report on or around November 17, 2026, comparable sales measured against management’s range for fiscal 2026 will be the key metric to watch. Investors should also watch that report to see whether management keeps its operating margin forecast of 12.4% to 12.6% for fiscal 2026.
Does This Mean You Should Act On HD?
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