Home Depot Inc.

Our stable outlook on Home Depot Inc. reflects our expectation for solid and stable credit metrics, with EBITDA margins in the high 17% area and adjusted debt to EBITDA below 2x, supported by a consistent financial policy. We expect demand in the new housing, repair, and remodeling markets to support higher earnings and cash flow over the next two years, even in a slowing economy. We could lower the rating if the company's financial policy becomes more aggressive, or if competition intensifies and operating performance stumbles in the face of soft demand. We would also lower the rating if leverage remains above 2x, which we estimate could occur if our adjusted 2019 EBITDA drops by about 15% while debt remains

...Although the CFO has changed, we expect consistent financial policies. Richard McPhail, who has been with Home Depot for nearly 15 years, was named the company's new finance chief following the retirement of Carol TomT. We anticipate the company will fund share repurchases with additional debt that offsets EBITDA growth to maintain its target leverage ratio of 2x. Solid operating execution and market position. Home Depot has a substantial store footprint in the U.S., and its wide, competitively priced product offering within the home-improvement industry is a business strength. We expect the company to maintain its strong market position given years of business investments and continued plans to bolster its supply chain and last-mile delivery capabilities. Its solid cash flows have been allocated toward business investments and shareholder returns. Merchandising and supply-chain initiatives have consistently increased the company's operating efficiency and profit margins, resulting in strong...

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