Home Depot ratings affirmed by Morningstar DBRS with stable trends

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Home Depot credit rating affirmed

Highlights

Morningstar DBRS affirmed Home Depot's Issuer Rating at 'A' and Commercial Paper rating at R-1 (low), maintaining stable outlooks for all ratings.
Home Depot revenue is forecast to rise to about $170 billion in F2026 from $165 billion in F2025, driven by the GMS Inc. acquisition and 15 to 17 new store openings.
EBITDA is projected to reach $25.0 billion in F2026 and $26.0 billion in F2027, with margin pressure in 2026 due to the GMS business before slight improvement thereafter.

Rating confirmation and forecast outlook

As reported by Morningstar DBRS, DBRS Limited confirms The Home Depot, Inc.'s Issuer Rating and Senior Unsecured Debt rating at "A" and its Commercial Paper rating at R-1 (low), while also confirming Home Depot of Canada Inc.'s Commercial Paper rating at R-1 (low). The trends on all ratings remain Stable.

The rating agency says the decision reflects stable operating performance over the 12 months ended February 1, 2026, in line with its expectations despite weak consumer confidence, lower housing affordability and subdued housing turnover. It adds that possible changes in tariff policies pose downside risk to earnings forecasts, but Home Depot's scale, market position, diversified supply chain and operating flexibility should help limit the effect on performance.

Morningstar DBRS says Home Depot is well positioned within the current rating category and has enough cushion to absorb near-term market volatility. It also expects the company to keep balancing investment spending with shareholder returns so that leverage stays relatively stable.

Demand risks and credit triggers

For the near term, Morningstar DBRS expects consumer spending patterns in home improvement to remain broadly similar to last year, with sales led by small renovations, repairs and urgent replacement needs. Larger renovation projects, along with discretionary purchases of seasonal goods and home decor, are expected to stay subdued.

The agency forecasts total revenue to rise modestly to about $170 billion in F2026 from roughly $165 billion in F2025, supported by a full-year contribution from the GMS Inc. acquisition, 15 to 17 new store openings and tuck-in acquisitions. Comparable sales are expected to increase slightly more than 1% year over year, with low-single-digit average ticket growth partly offset by a small decline in transaction volumes.

For F2027, Morningstar DBRS expects a modest recovery in big-ticket categories and a slight improvement in larger home-related renovation projects, supporting low-single-digit sales growth. EBITDA margins are expected to edge down in 2026 because of the lower-margin GMS business before improving slightly later as cost-saving initiatives and productivity gains take hold, with EBITDA projected at about $25.0 billion in F2026 and about $26.0 billion in F2027, up from $24.2 billion in F2025.

Morningstar DBRS says a negative rating action could follow if weaker operating performance or more aggressive financial management pushes debt-to-EBITDA leverage above 2.5x on a sustained basis. A positive action is viewed as unlikely in the near term, but could occur if earnings improve considerably or capital allocation strengthens credit metrics structurally well below 2.0x.

In our earlier analysis of Home Depot’s (HD) share price, we highlighted persistent selling pressure as the stock traded below key weekly moving averages and momentum indicators stayed broadly bearish. The outlook pointed to a sideways-to-lower trading range around $334.55–$344.33, with the next directional shift hinging on a decisive break above $344.33 or below support.

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