HD The Home Depot, Inc.

The Home Depot, Inc. runs ~2,350 big-box home-improvement warehouses and makes its money on a high-turn, high-ROIC model: FY25 (10-K, period-end 2026-02-01, SEC XBRL) revenue $164.7B, gross profit $54.9B (~33% gross margin), operating income $20.9B (~12.7% op margin), net income $14.16B, diluted EPS $14.23, operating cash flow $16.3B. Equity is thin ($12.8B) by design — decades of buybacks — so ROE screens >100%; the honest quality read is ~13% op margin and $16B+ of OCF thrown off every year, a cash-flow-today franchise with a 2.76% dividend (aristocrat, 4x/yr since 1987).

Why now: the stock is ~$341 vs a $418 52w high — a ~18% drawdown — sitting between its 50d ($324.5) and 200d ($352.8). This is the rate-sensitive housing/big-ticket cycle at a trough, not a franchise crack: FY25 EPS was down ~4% YoY and rev only +4.8%, the cyclical soft patch that put a durable compounder on sale. I am buying the trough of a good business, not a broken one. Reasonable price for the quality — trailing PE 24.5x, fwd 22.7x, EV/EBITDA 15.9x. β0.951 helps the book off its 0.90 floor; Consumer Discretionary is our most-underweight sector (-3.4pp vs SPY) and has cost us active return.

STOP: comp-store sales turning structurally negative (not just cyclically soft), operating margin breaking below ~11%, an OCF collapse below ~$13B, or -15% relative. Next earnings 08-18 — well outside any T+1 freeze today.