Another Banner Quarter for Home Depot

Despite increasing headwinds across the home improvement landscape, including rising interest rates (with mortgage rates up 80 basis points over the last 12 months) and declining existing home sales recently, wide-moat

We see a few factors that could help support Home Depot’s growth even with a housing slowdown. First, the maintenance and repair business provides a sticky, consistent customer that could drive incremental purchases. Second, as the baby boomers continue to age, the do-it-for-me consumer becomes more important, and Home Depot can link pros and consumers together to facilitate home renovations, particularly as the housing stock ages and consumers stay in their homes longer. Additionally, while caution has sounded on home sales and mortgage applications, existing home sales prices are still rising, indicating that the wealth effect remains intact, spurring willingness to spend in the category. These factors support our long-term outlook, including an average 3.4% comp sales growth, 3.6% sales growth, and modest operating margin expansion of about 20 basis points per year, to 16% in 2027.

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