Home Depot Inc. (NYSE:HD)

The analysis of the financial ratios from the given periods reveals several notable trends in the company's performance.

Return on Assets (ROA)

The ROA demonstrates an overall fluctuating pattern over the six periods. Initially, there was a decline from 21.94% in 2020 to 18.23% in 2021, followed by an increase to 22.86% in 2022. Subsequently, the ROA slightly decreased to 22.38% in 2023 and then dropped more significantly to 19.79% in 2024, continuing a downward trend to 15.4% in 2025. This indicates that the company's efficiency in generating profit from its assets has generally weakened toward the most recent period.

Financial Leverage

The financial leverage ratio shows notable volatility. No value is reported for 2020 and 2022, but where available, there is a marked increase from 21.39 in 2021 to 48.94 in 2023, escalating sharply to 73.3 in 2024, before decreasing drastically to 14.48 in 2025. This suggests sporadic leverage management with periods of heavy debt utilization followed by a significant deleveraging or rebalancing in the final year.

Return on Equity (ROE)

ROE values exhibit dramatic fluctuations, reflecting extreme volatility in shareholder returns. The data for 2020 and 2022 is missing, but 2021 shows an exceptionally high figure of 390%, followed by an extraordinary surge to 1095.07% in 2023 and an even higher 1450.48% in 2024. In 2025, the ROE declines sharply to 222.98%. Such extreme peaks are likely influenced by very high leverage (as indicated by financial leverage trends) or non-recurring factors impacting equity returns.

In summary, the company’s asset utilization efficiency (ROA) has declined in recent years, while the capital structure demonstrates periods of increased leverage usage followed by a reduction. The shareholder return (ROE) has experienced significant volatility, possibly driven by leverage fluctuations or other extraordinary effects. These trends suggest a somewhat unstable financial performance with shifting risk profiles over the analyzed periods.

Net Profit Margin

The net profit margin exhibited slight fluctuations over the periods, peaking at 10.87% in both January 30, 2022, and January 29, 2023, before declining to 9.28% by February 2, 2025. This indicates a moderate variation in profitability relative to sales, with a downward trend in the most recent period.

Asset Turnover

The asset turnover ratio shows an overall decreasing trend throughout the periods, starting at 2.15 in February 2, 2020, and gradually declining to 1.66 by February 2, 2025. This suggests diminishing efficiency in utilizing assets to generate sales over time.

Financial Leverage

Financial leverage data is incomplete in earlier periods but shows significant variability in reported values, with an exceptionally high figure of 73.3 recorded in January 28, 2024, before dropping sharply to 14.48 in February 2, 2025. This indicates considerable fluctuation in the extent to which the company is using debt financing.

Return on Equity (ROE)

Return on equity exhibits extreme variability with extraordinarily high values in reported periods, reaching a peak of 1450.48% in January 28, 2024, before decreasing substantially to 222.98% by February 2, 2025. This volatility reflects significant changes in the company's effectiveness at generating profit from shareholders' equity but may also be influenced by fluctuations in financial leverage.

The financial data reveals several noteworthy trends over the analyzed periods. The Tax Burden ratio remains consistently stable at 0.76 throughout all years, indicating a steady tax impact on earnings before tax. In contrast, the Interest Burden ratio shows a gradual decrease from 0.92 in early 2020 to 0.89 in early 2025, which suggests an improving ability to manage interest expenses relative to earnings before interest and taxes.

EBIT Margin

The EBIT margin exhibits some volatility over the period. It started at 14.44% in 2020, decreased slightly to 13.87% in 2021, peaked at 15.31% in 2023, and then declined to 13.62% by 2025. This pattern indicates fluctuations in operating profitability, potentially reflecting changes in cost management or pricing power.

Asset Turnover

Asset turnover shows a declining trend, beginning at 2.15 in 2020 and decreasing to 1.66 in 2025. This decline suggests that the company's efficiency in using its assets to generate sales has weakened over the years.

Financial Leverage

Financial leverage data is partially missing but indicates significant variability. Where available, the leverage ratio increased dramatically from 21.39 in 2021 to a peak of 73.3 in 2024, then declined sharply to 14.48 in 2025. This volatility suggests periods of increased debt usage followed by deleveraging, reflecting changes in the company’s capital structure or financing strategy.

Return on Equity (ROE)

ROE figures are highly volatile and show extraordinary values, with 390% in 2021, a peak of over 1450% in 2024, and a sharp decline to 223% in 2025. These unusually high levels indicate exceptional returns to equity holders during certain periods, potentially driven by significant leverage or exceptional income events. However, the steep declines also highlight underlying volatility in equity returns.

Overall, the company demonstrates a stable tax environment and an improved interest burden over time, but experiences fluctuating operational profitability and a declining asset utilization efficiency. The significant variations in financial leverage and ROE suggest active capital management and periods of heightened financial risk, which may warrant further analysis to understand underlying causes and sustainability.

Net Profit Margin

The net profit margin demonstrates variability over the observed periods. Starting at 10.2% in early 2020, it slightly declines to 9.74% in early 2021 before rising to a peak of 10.87% in both early 2022 and early 2023. However, a downward trend is observed thereafter, with the margin decreasing to 9.92% in early 2024 and continuing to drop to 9.28% by early 2025. This pattern suggests initial improvement and stabilization, followed by a gradual erosion in profitability relative to sales during the latter years.

Asset Turnover

Asset turnover exhibits a declining trend across the time frame. Starting at 2.15 in early 2020, it decreases to 1.87 in early 2021. Although there is a partial recovery to 2.1 in early 2022, the ratio falls again in subsequent years, reaching 2.06 in early 2023 and continuing downward to 1.99 in early 2024 and further to 1.66 in early 2025. This indicates a diminishing efficiency in using assets to generate sales, which becomes more pronounced toward the end of the period.

Return on Assets (ROA)

ROA follows a pattern similar to net profit margin and asset turnover, with notable fluctuations. Beginning at 21.94% in early 2020, it decreases significantly to 18.23% in early 2021. Then, it recovers sharply to 22.86% in early 2022 and slightly declines to 22.38% in early 2023. In the last two years observed, ROA falls to 19.79% in early 2024 and further decreases to 15.4% in early 2025. This trend indicates that while the company achieved periods of higher asset profitability mid-series, the overall ability to generate returns from assets has weakened over the latter part of the observed timeframe.

Tax Burden

The tax burden ratio has remained stable at 0.76 throughout the entire period analyzed, indicating consistency in the effective tax rate applied to the company's earnings before tax.

Interest Burden

The interest burden ratio shows a gradual decline from 0.92 in 2020 to 0.89 in 2025, suggesting a slight improvement in the company’s ability to manage interest expenses relative to earnings before interest and taxes (EBIT). This decreasing trend reflects potentially lower interest costs or improved operational earnings that can cover interest obligations more efficiently over time.

EBIT Margin

The EBIT margin exhibits moderate fluctuations. It decreased from 14.44% in 2020 to 13.87% in 2021, then improved to a peak of 15.31% in 2023. Subsequently, it declined again to 13.62% in 2025. Overall, this indicates variability in operating profitability, possibly driven by changes in cost management, pricing strategies, or sales mix.

Asset Turnover

The asset turnover ratio has shown a downward trend from 2.15 in 2020 to 1.66 in 2025, indicating a decreasing efficiency in utilizing assets to generate sales. This decline points to potential challenges in asset management or slower sales growth relative to asset base expansion.

Return on Assets (ROA)

The ROA depicts notable volatility over the years. It started at 21.94% in 2020, decreased sharply to 18.23% in 2021, then rebounded effectively to 22.86% in 2022 before gradually declining to 15.4% in 2025. This pattern suggests fluctuations in both profitability and asset utilization, with the recent years showing reduced effectiveness in generating profits from assets.

The analysis of the financial ratios over the six-year period reveals several notable trends in the company's profitability and cost management.

Tax Burden

The tax burden ratio has remained remarkably stable at 0.76 throughout the entire period, indicating a consistent effective tax rate and tax expense relative to earnings before taxes. This stability suggests predictable tax impacts on net income.

Interest Burden

The interest burden ratio exhibited a slight but steady decline from 0.92 in 2020 to 0.89 in 2025. This downward trend implies a gradual reduction in the proportion of earnings before interest and taxes retained after interest expenses, possibly reflecting either increased interest costs or higher leverage over time.

EBIT Margin

The EBIT margin showed an initial decrease from 14.44% in 2020 to 13.87% in 2021, followed by a rise to 15.31% in 2023. However, the margin then declined to 13.62% by 2025. This pattern suggests some fluctuation in operational profitability, with a peak in 2023 but an overall moderate decline by the end of the period.

Net Profit Margin

Similarly, the net profit margin dipped from 10.2% in 2020 to 9.74% in 2021, then increased to a peak of 10.87% in 2022 and 2023 before declining again to 9.28% in 2025. This indicates that while the company managed to improve bottom-line profitability in the middle years, the margin contracted in the most recent period, potentially driven by the combined effects of lower EBIT margins and interest burden.

Overall, the data portrays a company with stable tax obligations but facing slight challenges in controlling interest expenses and maintaining operational profitability in recent years. The fluctuations in EBIT and net profit margins suggest varying efficiency or cost pressures that impacted profitability over the period analyzed.