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Home Depot (HD) Is 32% Below Its All-Time High: Here's 1 Reason to Avoid the Stock Right Now

Source The Motley Fool

Key Points

Amidst a tighter macro backdrop with elevated inflation and higher interest rates, Home Depot’s same-store sales growth has been under pressure.
The economically sensitive business will likely continue to struggle posting notable gains until the Federal Reserve loosens monetary policy.
10 stocks we like better than Home Depot ›

Home Depot (NYSE: HD) operates thousands of stores in total, most in the U.S. It generated $48 billion in revenue just in the latest fiscal quarter (Q2 2026 ended Aug. 2). These figures highlight its dominance in the home improvement industry. But investors haven't been winning.

This well-known retail stock is trading 32% below its all-time high (as of Sept. 25). Although investors can buy Home Depot shares on a huge dip, there's one clear reason to avoid the company right now.

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Image source: The Motley Fool.

From a fundamental perspective, Home Depot's business has been under pressure in recent years. It posted same-store sales declines in fiscal 2023 and fiscal 2024. Last fiscal year, this metric turned to a positive 0.3%. And management expects it to rise by just 1% (at the midpoint) in fiscal 2026.

The stabilization is encouraging, but the gains have been muted. This reveals just how exposed Home Depot is to the macroeconomic environment. The economy is characterized today by above-normal inflation, which has prompted the Federal Reserve to recently raise its benchmark interest rate.

That backdrop makes things difficult for Home Depot. It puts pressure on demand, as households aren't as willing to spend on major renovations and upgrades. Only when the company returns to better growth should investors even consider buying shares. This doesn't seem likely until the Kevin Warsh-led central bank can get inflation under control.

Should you buy stock in Home Depot right now?

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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Home Depot. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.

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