Stock Analysis on Net

Home Depot Inc. (NYSE:HD)

Economic Value Added (EVA)

Microsoft Excel

EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.


Economic Profit

Home Depot Inc., economic profit calculation

US$ in millions

Microsoft Excel
12 months ended: Feb 2, 2025 Jan 28, 2024 Jan 29, 2023 Jan 30, 2022 Jan 31, 2021 Feb 2, 2020
Net operating profit after taxes (NOPAT)1 16,730 16,384 18,170 18,148 14,172 12,860
Cost of capital2 13.63% 13.92% 13.57% 13.70% 13.66% 13.19%
Invested capital3 72,841 55,884 55,111 48,299 49,973 36,678
 
Economic profit4 6,804 8,607 10,689 11,530 7,348 8,022

Based on: 10-K (reporting date: 2025-02-02), 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-02-02).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 16,73013.63% × 72,841 = 6,804

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. Home Depot Inc. economic profit decreased from 2023 to 2024 and from 2024 to 2025.

Net Operating Profit after Taxes (NOPAT)

Home Depot Inc., NOPAT calculation

US$ in millions

Microsoft Excel
12 months ended: Feb 2, 2025 Jan 28, 2024 Jan 29, 2023 Jan 30, 2022 Jan 31, 2021 Feb 2, 2020
Net earnings 14,806 15,143 17,105 16,433 12,866 11,242
Deferred income tax expense (benefit)1 (39) (230) 138 (254) (607) 191
Increase (decrease) in deferred revenue2 (152) (302) (532) 773 707 334
Increase (decrease) in equity equivalents3 (191) (532) (394) 519 100 525
Interest expense 2,321 1,943 1,617 1,347 1,347 1,201
Interest expense, operating lease liability4 356 301 229 167 179 183
Adjusted interest expense 2,677 2,244 1,846 1,514 1,526 1,384
Tax benefit of interest expense5 (562) (471) (388) (318) (321) (291)
Adjusted interest expense, after taxes6 2,115 1,773 1,459 1,196 1,206 1,093
Net operating profit after taxes (NOPAT) 16,730 16,384 18,170 18,148 14,172 12,860

Based on: 10-K (reporting date: 2025-02-02), 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-02-02).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in deferred revenue.

3 Addition of increase (decrease) in equity equivalents to net earnings.

4 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 8,907 × 4.00% = 356

5 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 2,677 × 21.00% = 562

6 Addition of after taxes interest expense to net earnings.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. Home Depot Inc. NOPAT decreased from 2023 to 2024 but then slightly increased from 2024 to 2025.

Cash Operating Taxes

Home Depot Inc., cash operating taxes calculation

US$ in millions

Microsoft Excel
12 months ended: Feb 2, 2025 Jan 28, 2024 Jan 29, 2023 Jan 30, 2022 Jan 31, 2021 Feb 2, 2020
Provision for income taxes 4,600 4,781 5,372 5,304 4,112 3,473
Less: Deferred income tax expense (benefit) (39) (230) 138 (254) (607) 191
Add: Tax savings from interest expense 562 471 388 318 321 291
Cash operating taxes 5,201 5,482 5,622 5,876 5,040 3,573

Based on: 10-K (reporting date: 2025-02-02), 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-02-02).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. Home Depot Inc. cash operating taxes decreased from 2023 to 2024 and from 2024 to 2025.

Invested Capital

Home Depot Inc., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel
Feb 2, 2025 Jan 28, 2024 Jan 29, 2023 Jan 30, 2022 Jan 31, 2021 Feb 2, 2020
Short-term debt 316 1,035 974
Current installments of long-term debt 4,582 1,368 1,231 2,447 1,416 1,839
Long-term debt, excluding current installments 48,485 42,743 41,962 36,604 35,822 28,670
Operating lease liability1 8,907 8,132 7,171 6,183 6,184 5,894
Total reported debt & leases 62,290 52,243 50,364 46,269 43,422 37,377
Stockholders’ equity (deficit) 6,640 1,044 1,562 (1,696) 3,299 (3,116)
Net deferred tax (assets) liabilities2 1,693 550 700 565 826 567
Deferred revenue3 2,610 2,762 3,064 3,596 2,823 2,116
Equity equivalents4 4,303 3,312 3,764 4,161 3,649 2,683
Accumulated other comprehensive (income) loss, net of tax5 1,129 477 718 704 671 739
Adjusted stockholders’ equity (deficit) 12,072 4,833 6,044 3,169 7,619 306
Construction in progress6 (1,521) (1,192) (1,297) (1,139) (1,068) (1,005)
Invested capital 72,841 55,884 55,111 48,299 49,973 36,678

Based on: 10-K (reporting date: 2025-02-02), 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-02-02).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of deferred revenue.

4 Addition of equity equivalents to stockholders’ equity (deficit).

5 Removal of accumulated other comprehensive income.

6 Subtraction of construction in progress.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. Home Depot Inc. invested capital increased from 2023 to 2024 and from 2024 to 2025.

Cost of Capital

Home Depot Inc., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 349,054 349,054 ÷ 407,112 = 0.86 0.86 × 15.38% = 13.19%
Debt3 49,151 49,151 ÷ 407,112 = 0.12 0.12 × 3.90% × (1 – 21.00%) = 0.37%
Operating lease liability4 8,907 8,907 ÷ 407,112 = 0.02 0.02 × 4.00% × (1 – 21.00%) = 0.07%
Total: 407,112 1.00 13.63%

Based on: 10-K (reporting date: 2025-02-02).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 375,585 375,585 ÷ 425,480 = 0.88 0.88 × 15.38% = 13.58%
Debt3 41,763 41,763 ÷ 425,480 = 0.10 0.10 × 3.65% × (1 – 21.00%) = 0.28%
Operating lease liability4 8,132 8,132 ÷ 425,480 = 0.02 0.02 × 3.70% × (1 – 21.00%) = 0.06%
Total: 425,480 1.00 13.92%

Based on: 10-K (reporting date: 2024-01-28).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 292,277 292,277 ÷ 341,270 = 0.86 0.86 × 15.38% = 13.17%
Debt3 41,822 41,822 ÷ 341,270 = 0.12 0.12 × 3.61% × (1 – 21.00%) = 0.35%
Operating lease liability4 7,171 7,171 ÷ 341,270 = 0.02 0.02 × 3.20% × (1 – 21.00%) = 0.05%
Total: 341,270 1.00 13.57%

Based on: 10-K (reporting date: 2023-01-29).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 327,624 327,624 ÷ 377,475 = 0.87 0.87 × 15.38% = 13.35%
Debt3 43,668 43,668 ÷ 377,475 = 0.12 0.12 × 3.48% × (1 – 21.00%) = 0.32%
Operating lease liability4 6,183 6,183 ÷ 377,475 = 0.02 0.02 × 2.70% × (1 – 21.00%) = 0.03%
Total: 377,475 1.00 13.70%

Based on: 10-K (reporting date: 2022-01-30).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 315,312 315,312 ÷ 365,551 = 0.86 0.86 × 15.38% = 13.27%
Debt3 44,055 44,055 ÷ 365,551 = 0.12 0.12 × 3.68% × (1 – 21.00%) = 0.35%
Operating lease liability4 6,184 6,184 ÷ 365,551 = 0.02 0.02 × 2.90% × (1 – 21.00%) = 0.04%
Total: 365,551 1.00 13.66%

Based on: 10-K (reporting date: 2021-01-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 195,345 195,345 ÷ 237,480 = 0.82 0.82 × 15.38% = 12.65%
Debt3 36,241 36,241 ÷ 237,480 = 0.15 0.15 × 3.98% × (1 – 21.00%) = 0.48%
Operating lease liability4 5,894 5,894 ÷ 237,480 = 0.02 0.02 × 3.10% × (1 – 21.00%) = 0.06%
Total: 237,480 1.00 13.19%

Based on: 10-K (reporting date: 2020-02-02).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

Home Depot Inc., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Feb 2, 2025 Jan 28, 2024 Jan 29, 2023 Jan 30, 2022 Jan 31, 2021 Feb 2, 2020
Selected Financial Data (US$ in millions)
Economic profit1 6,804 8,607 10,689 11,530 7,348 8,022
Invested capital2 72,841 55,884 55,111 48,299 49,973 36,678
Performance Ratio
Economic spread ratio3 9.34% 15.40% 19.39% 23.87% 14.70% 21.87%
Benchmarks
Economic Spread Ratio, Competitors4
Amazon.com Inc. -0.07% -5.72% -16.91% 3.09% 0.43%
Lowe’s Cos. Inc. 17.46% 20.25% 15.19% 23.30% 10.82% 7.18%
TJX Cos. Inc. 9.33% 9.03% 6.04% 6.01% -10.88% 6.83%

Based on: 10-K (reporting date: 2025-02-02), 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-02-02).

1 Economic profit. See details »

2 Invested capital. See details »

3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 6,804 ÷ 72,841 = 9.34%

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. Home Depot Inc. economic spread ratio deteriorated from 2023 to 2024 and from 2024 to 2025.

Economic Profit Margin

Home Depot Inc., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Feb 2, 2025 Jan 28, 2024 Jan 29, 2023 Jan 30, 2022 Jan 31, 2021 Feb 2, 2020
Selected Financial Data (US$ in millions)
Economic profit1 6,804 8,607 10,689 11,530 7,348 8,022
 
Net sales 159,514 152,669 157,403 151,157 132,110 110,225
Add: Increase (decrease) in deferred revenue (152) (302) (532) 773 707 334
Adjusted net sales 159,362 152,367 156,871 151,930 132,817 110,559
Performance Ratio
Economic profit margin2 4.27% 5.65% 6.81% 7.59% 5.53% 7.26%
Benchmarks
Economic Profit Margin, Competitors3
Amazon.com Inc. -0.04% -3.22% -8.83% 1.33% 0.17%
Lowe’s Cos. Inc. 5.48% 6.09% 3.88% 6.34% 3.43% 2.66%
TJX Cos. Inc. 3.74% 3.52% 2.47% 2.44% -7.58% 3.06%

Based on: 10-K (reporting date: 2025-02-02), 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-02-02).

1 Economic profit. See details »

2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × 6,804 ÷ 159,362 = 4.27%

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. Home Depot Inc. economic profit margin deteriorated from 2023 to 2024 and from 2024 to 2025.