Home Depot Inc. (NYSE:HD)

Return on Assets (ROA)

The Return on Assets (ROA) initially remained relatively stable, hovering around 18.6% from May 2020 through early 2021. A notable increase occurred between January 2021 and January 2022, with ROA peaking at approximately 22.86%. After this peak, a gradual decline is observed, with ROA decreasing steadily to around 13.72% by November 2025. This trend suggests that while asset profitability improved significantly in 2021, it faced a consistent downward trajectory in subsequent years.

Financial Leverage

Financial Leverage data shows significant volatility and some periods with missing values. Early data points are largely absent except for a few spikes, notably 70.56 and an extremely high value of 319.94, indicating sporadic but intense leverage levels. After these peaks, leverage seems to moderate, decreasing to more stable values around 9.38 to 12.46 towards the end of the observed timeline. Overall, the data suggests periods of high financial leverage volatility, followed by a general trend toward reduced leverage in the later years.

Return on Equity (ROE)

Return on Equity displays extreme fluctuations. After missing data early on, ROE shows extraordinary spikes with very high percentages, reaching values such as 813.68% and a remarkable peak of 7124.47%. These outliers reflect unusual or possibly non-recurring events impacting equity returns. Thereafter, ROE declines sharply but remains elevated relative to typical standards with values predominantly exceeding 100% until a reduction trend begins, lowering ROE to around 120.35% by November 2025. The pattern indicates an initial phase of exceptionally high equity returns followed by ongoing normalization but still above typical levels.

Overall Financial Trends

The data reflects a period of strong profitability and high financial returns peaking around 2021 to early 2022. The Return on Assets peaked and then consistently declined, suggesting decreasing efficiency in asset utilization over time. Financial leverage experienced wide fluctuation with some extreme values, settling into lower, more sustainable ratios in later periods. Return on Equity exhibited highly volatile and extreme peaks indicative of extraordinary returns, before trending downwards yet remaining relatively high. The combination of declining ROA with persistent high but decreasing ROE alongside fluctuating leverage implies that while the company managed high returns on shareholder equity, its asset efficiency and leverage management faced increasing challenges towards the later periods.

The financial data reveals several notable trends in profitability, efficiency, leverage, and returns over the observed periods.

Net Profit Margin

The net profit margin demonstrates a generally stable pattern with slight fluctuations around a range of approximately 9.7% to 10.9% for the majority of the periods. It reached peak values slightly above 10.8% around early 2022, followed by a gradual decline towards the later dates, dropping below 9% by the last reported period. This indicates that while the company maintained consistent profitability relative to sales for several quarters, there is a recent downward trend in profitability margins.

Asset Turnover

Asset turnover remained relatively steady in the 1.87 to 2.10 range across most periods, suggesting stable operational efficiency in generating sales from assets. Noteworthy is a significant decline after early 2024, where the ratio drops markedly to values between approximately 1.56 and 1.66, indicating a reduction in how efficiently assets are being utilized to generate revenue in the more recent quarters.

Financial Leverage

The financial leverage ratio shows extreme volatility with very high peaks and sharp drops, particularly around the early to mid-periods. For instance, leverage spikes to values exceeding 300 before dramatically falling to single-digit levels by the final periods. This erratic pattern suggests periods of significant borrowing or risk exposure followed by aggressive deleveraging or balance sheet restructuring, signaling potential shifts in capital strategy or financial risk management during these quarters.

Return on Equity (ROE)

ROE exhibits extraordinary fluctuations with values ranging from hundreds to thousands of percent, including a massive spike exceeding 7,000% at a midpoint in the data. Such extreme ROE values are highly unusual and indicate that there may be substantial volatility in net income, equity base, or both. Despite these spikes, there is a clear declining trend in ROE in the later periods, converging towards more conventional but still very high levels above 100%. This suggests that while the company experienced periods of exceptional equity returns, this performance has moderated over time, potentially reflecting stabilization or normalization of earnings and equity.

In summary, the company maintained steady profitability and asset efficiency for much of the timeline but encountered significant shifts in financial leverage and highly variable returns on equity. The recent trends indicate a decline in profit margin and asset turnover efficiency, alongside a reduction in leverage and more normalized, though still elevated, ROE figures. These patterns may reflect strategic financial adjustments, operational challenges, or market conditions influencing the overall performance.

Tax Burden

The tax burden ratio remained constant at 0.76 throughout the entire period, indicating a stable effective tax rate with no fluctuations observed.

Interest Burden

The interest burden ratio showed a slight decreasing trend over time, starting at 0.92 and gradually declining to 0.89 by the end of the series. This suggests a marginally increasing impact of interest expenses on income before taxes.

EBIT Margin

EBIT margin exhibited an overall slight decrease over the periods presented. It began around 13.9%, reached a peak just above 15.3%, and then experienced a gradual decline to approximately 13.0%. This indicates that operating profitability initially improved but later diminished toward the end of the timeframe.

Asset Turnover

Asset turnover displayed variation with initial values near 1.9, peaking around 2.1, then declining significantly in later periods to a lower range between 1.5 and 1.6. The decrease toward the end suggests reduced efficiency in generating sales from assets during the most recent quarters.

Financial Leverage

Financial leverage data is incomplete but indicates considerable volatility where reported. Values fluctuate dramatically, ranging from low teens to figures exceeding several hundred at certain points. This irregularity may reflect changes in capital structure or accounting adjustments impacting equity or assets.

Return on Equity (ROE)

ROE shows extreme volatility with several unusually high values, including peaks in the thousands and a general pattern of sharp increases and decreases across the timeline. Such fluctuations likely stem from the high variability in components of equity and profitability, possibly compounded by extraordinary gains or losses, and varying financial leverage. Toward the latest periods, ROE decreases significantly but remains elevated relative to typical corporate financial metrics.

Overall Summary

The company's financial performance reveals a stable tax environment and a moderate rise in interest burden. Operating efficiency experienced a peak and subsequent decline in margins and asset utilization. Leverage exhibited instability with wide swings, possibly impacting the extreme volatility seen in ROE. These patterns suggest fluctuating operational and financial conditions, warranting close monitoring of asset management and capital structure to sustain profitability and return metrics.

Net Profit Margin

The net profit margin exhibited a generally increasing trend from May 2020 through January 2022, rising from 9.79% to a peak near 10.88%. From early 2022 onward, there was a gradual decline, reducing to 8.77% by November 2025. This decline suggests a reduction in profitability relative to revenue over the more recent periods.

Asset Turnover

Asset turnover remained relatively stable, fluctuating around a level near 2.0 between May 2020 and January 2023. Following this, a notable decrease occurred, with the ratio falling to approximately 1.56 by late 2025. This trend indicates a reduction in the efficiency with which assets generate revenue in the latter periods.

Return on Assets (ROA)

The return on assets showed a positive trajectory, increasing from 18.68% in May 2020 to a peak of 22.86% in January 2022. Thereafter, a consistent decline was observed, dropping to 13.72% by November 2025. The pattern mirrors the behaviors of both net profit margin and asset turnover, reflecting diminished profitability and operational efficiency in utilizing assets over recent periods.

Tax Burden

The tax burden ratio remained constant at 0.76 throughout the entire period, indicating stable tax obligations relative to pre-tax earnings without noticeable fluctuations.

Interest Burden

The interest burden ratio showed a gradual decline over time, starting at 0.92 and decreasing to 0.89 by the end of the observed timeframe. This suggests a slight improvement in the company’s ability to cover interest expenses from earnings before interest and taxes (EBIT), reflecting potentially lower interest costs or improved operational performance.

EBIT Margin

The EBIT margin experienced an initial increase from approximately 13.9% to a peak around 15.35% between early 2021 and early 2023, indicating improving operational profitability. Following this peak, there was a gradual decline to just above 13% by late 2025. This trend indicates a period of margin compression in recent quarters, possibly due to increased costs or competitive pressures.

Asset Turnover

Asset turnover ratios fluctuated moderately, beginning near 1.9 and rising slightly above 2.0 in the middle of the timeline, which reflects enhanced efficiency in utilizing assets to generate sales. However, from early 2024 onward, asset turnover declined notably to roughly 1.56 by late 2025, suggesting a period of reduced asset efficiency that may be related to slower sales growth or increased asset base without proportional revenue gains.

Return on Assets (ROA)

ROA showed a cyclical pattern with a notable peak around 22.86% in early 2022, signifying strong overall profitability relative to assets at that point. After this peak, ROA consistently declined over subsequent periods, reaching approximately 13.72% by the end of the dataset. This downward trend reflects combined effects of declining EBIT margins and weakened asset turnover, indicating decreased overall effectiveness in generating returns from the company’s assets.

The financial data over multiple quarters displays several notable trends in key profitability ratios.

Tax Burden

The tax burden ratio remained constant at 0.76 throughout the entire period. This indicates stable tax obligations relative to pre-tax earnings, with no observable fluctuations or seasonal effects impacting this ratio.

Interest Burden

There is a gradual decline in the interest burden ratio, starting at 0.92 and decreasing steadily to 0.89 by the end of the period. This trend suggests a slight increase in interest expenses relative to EBIT over time, potentially indicating rising debt costs or increased leverage.

EBIT Margin

The EBIT margin shows an initial rising trend, starting from 13.91% and reaching a peak of 15.35% approximately midway through the timeline. After this peak, the margin gradually declines, falling back to around 13.03%. This pattern might reflect early operational efficiency gains or improved pricing power, followed by some margin compression possibly due to higher costs or competitive pressures in the later periods.

Net Profit Margin

The net profit margin follows a pattern similar to the EBIT margin, increasing from 9.79% to a high around 10.88%, and then declining steadily to approximately 8.77% by the last data point. The decrease is somewhat more pronounced than for EBIT margin, which aligns with the observed increase in interest burden, indicating that non-operating expenses may be increasingly impacting net profitability.

Overall, the data suggests the company experienced a period of improved operational profitability that peaked and was subsequently followed by a gradual decline in margins. Stable tax burden indicates tax management remained consistent, whereas increasing interest burden may have contributed to margin erosion at the net profit level. Monitoring the interest expenses and operational cost drivers will be important for future margin sustainability.