Don't Buy Home Depot Stock Until You Know This 1 Key Metric
Written by Neil Patel for The Motley Fool -> For any retailer, there's one data point that provides a clear look at how the business is performing in any given period. Dividend stock investors might be drawn to Home Depot's 3% yield. With 2,361 company stores and first-quarter
For any retailer, there's one data point that provides a clear look at how the business is performing in any given period.
Dividend stock investors might be drawn to Home Depot's 3% yield.
With 2,361 company stores and first-quarter annualized revenue of $167 billion, Home Depot (NYSE: HD) has a strong position in the home improvement market. But its shares currently trade 28% below their peak (as of June 4), which might prompt investors to want to buy the business.
But you shouldn't consider adding this retail stock to your portfolio until you know this one metric.
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To gauge Home Depot's performance, investors must look at same-store sales, which calculates the year-over-year change in revenue from locations that have been open for at least 52 weeks. It strips away the impact new stores can have on the top line, giving a clean and consistent look at the financials.
During the fiscal 2026 first quarter (ended May 3), same-store sales grew by only 0.6%, as lower traffic was offset by higher ticket sizes. This followed a 0.3% gain in fiscal 2025 and a 1.8% decline in fiscal 2024. These aren't encouraging figures.
Given that it serves the housing market, it's no surprise that Home Depot is dealing with cyclicality amid higher mortgage rates and inflationary pressures. In an uncertain macroeconomic environment, consumers don't feel as confident spending big money on upgrades and renovations.
