Fitch Ratings affirmed The Home Depot, Inc.'s Long-Term Issuer Default Rating (IDR) at 'A' and Short-Term IDR at 'F1' on April 23, 2025, with a Stable Outlook. The ratings reflect Home Depot's disciplined capital allocation, large scale with $159.5 billion in revenue in 2024, and robust cash flow.
Fitch expects Home Depot's EBITDAR leverage to be around 2.3x in 2025 and to decline toward its 2.0x leverage target over the next several years. This deleveraging plan follows the $17.7 billion acquisition of SRS Distribution in June 2024, which was partially debt-funded, leading to a temporary pause in share repurchases.
The rating agency projects Home Depot's sales to be roughly flat in 2025 at around $160 billion, with EBITDA potentially declining to $23.5 billion from $25.3 billion in 2024. This anticipated decline is primarily attributed to the inflationary impact of tariffs on gross margins, which are expected to decrease from 33.4% in 2024 to 32.2% in 2025. However, Fitch believes Home Depot's scale and purchasing power will help mitigate these impacts.
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