Fundamentals · HD

DuPont (ROE Decomposition) for HD

AI-generated plain-English read of dupont (roe decomposition) for HD. Updated daily.

ROE is falling (28.7%) and leverage of 6.58× is amplifying every problem. When a highly-levered company's ROE deteriorates, the real pain is usually in margins or debt service — check both.

What will probably happen

ROE has been falling — without a reversal in the weakest leg, the next period will likely show further pressure.
Critical leverage flag: a 6.58× equity multiplier means any margin contraction of even a few percentage points will wipe out ROE disproportionately. Watch for earnings revisions or debt-service pressure.

What to do

If you HOLD this stock: The 6.58× leverage is a structural risk for holders. Any macro headwind (rate rise, demand drop) that compresses margins gets amplified into ROE. Ensure your thesis accounts for this — the company has less margin of safety than its headline ROE suggests.
If you are EVALUATING this stock: Don't let the headline ROE (28.7%) mislead you — it's primarily a function of 6.58× leverage. A cleaner way to compare this company is on ROIC or on ROA, which strip out the capital structure effect.
If you trade OPTIONS: Leverage amplification + deteriorating ROE is structurally bearish. Elevated leverage means the stock can move sharply on bad news — protective puts or put spreads are justified on a fundamental basis, not just sentiment.

44 periods with all three DuPont legs populated — trend reads are reliable.

Technical details

Technical analysis

ROE: 28.7% — deteriorating
Sector context: not provided
Periods analysed: 44
Primary ROE driver: Leverage Driven
Profitability (net margin): 10.0% — improving, healthy
Asset efficiency (turnover): 0.44× — stable, healthy
Leverage (equity multiplier): 6.58× — deteriorating, healthy [CRITICAL]

Key levels

Key price and metric levels
Level	Value
latest em	6.583
latest roe	0.287
latest margin	0.1
latest turnover	0.438
em high threshold	4
em critical threshold	5

Caveats

Equity multiplier of 6.6× is critically high. A small profitability decline gets amplified proportionally into ROE — this company is running with very thin margin of safety.