Home Depot
HD · NYSERetail · Home Improvement / Building Supply
Since the Report − 5.8%
Close on Report DayAug 18
$340.33▲ 0.7%Report-Day Move
- Market Cap(Today)
- ≈ $320 B
- 1Y Return(At Report)
- − 12%
- P/E($14.80 · Trailing 12M)
- 21.7
- PEG(company guidance 2026)
- 10.83
- Net Margin(Trailing 12M)
- 8.4%
Home Depot grew 5.7% year over year to $47.9B in revenue in Q2; comparable sales rose 1.7% after nearly four years of weakness, topping expectations, and adjusted EPS of $4.92 beat estimates. Despite a still-'frozen' housing market, a shift toward smaller projects and a 2.4% rise in big-ticket spending were read positively; the stock gave back a 2% premarket gain and closed up 0.7%. Next in focus: guidance reaffirmed rather than raised, and the interim leadership setup during the CEO's medical leave.
Revenue (Q2)
$47.9B
▲ 5.7% YoY
Comparable Sales
▲ 1.7%
US ▲ 1.3%
Adjusted EPS
$4.92
Beat Estimate
Operating Income
$6.84B
▲ 4.3% YoY
Average Ticket
$92.50
443.2M Transactions
Stock Reaction
▲ 0.7%
Close-to-Close
Quarterly Revenue ($ Billion)
45.28
41.40
38.20
41.77
47.86
~42–43
- Q2 25
- Q3 25
- Q4 25
- Q1 26
- Q2 26
- Q3 26E
- Annual Revenue Growth
- ▲ 5.7%
- Big-Ticket Transactions
- ▲ 2.4%Over $1,000 Spend
- Gross Margin
- 33.7%~Flat YoY
Q3 FY26 Company Guidance
- Total Sales Growth2.5% – 4.5%
Full Year · ReaffirmedUnchanged
- Comparable Sales0% – 2%
Full-Year TargetFlat to Slightly Positive
- Adjusted EPS Growth0% – 4%
Base $14.69 · Mid ~2%Unchanged
- Adjusted Operating Margin12.8% – 13.0%
GAAP Margin 12.4%–12.6%Maintained
- Gross Margin33.1%
Single-Point Year TargetFlat Trend
The blue band is the company's low–high range; its length shows how much room the company left itself. The black triangle and the line beneath it mark where the market expected, and the notch in the band is the range's midpoint. The triangle appears only where a market expectation is known. Axis is ±115% around the midpoint.
- New Stores
- ~15 Units
- Capex / Sales
- ~2.5%
- Share Count
- 996M
“We saw broad-based demand across the business, with customers continuing to engage in smaller-scale projects. But the housing market remains frozen, and at current mortgage rates we don't see an inflection point in the near term.”
- Broad-based demand
- Smaller projects lead
- Housing market frozen
Summary
Home Depot posted $47.9B in net sales in the second quarter of fiscal 2026, up 5.7% from $45.3B a year earlier. The key data point was comparable sales rising 1.7%; because the company had endured nearly four years of weakness on this metric, turning positive marks a critical threshold. US comparable sales rose 1.3%, both above the ~1% the market expected. Adjusted EPS of $4.92 beat both the year-ago $4.68 and the $4.88 estimate; GAAP EPS was $4.79. Operating income rose 4.3% to $6.84B, average ticket was $92.50, and total transactions came in at 443.2 million.
The stock reacted in a measured but positive way: a premarket gain above 2% eroded over the session, and shares closed up 0.7% at $340.33. Investors focused on comps turning positive after a long drought and on big-ticket transactions over $1,000 rising 2.4% year over year, hinting at a modest revival in deferred large projects. On the other side, total revenue came in somewhat below the most ambitious $48.7B estimate, and management reaffirmed rather than raised its full-year guidance. Those two factors offset the enthusiasm from the strong comp print and drove the premarket premium to fade intraday. In short, the quarter was good but did not fully satisfy a market hoping for an upward revision.
Our overall view is cautiously positive. Home Depot operates in a housing market frozen by high mortgage rates (around 6.7%); housing turnover has sat at record lows for four years, continuing to suppress large renovation demand. Against that, the company has expanded its professional-customer and large-project distribution business through the SRS and GMS acquisitions; the portion of the 5.7% total growth above comparable sales comes largely from these deals. The reaffirmed guidance signals stability, analyst consensus sits on the buy side with a $374.69 average target, and the stock carries ~10% upside from current levels. We assign a score of 76 and a 'buy' rating: the comp inflection and acquisition contribution are positive, but the frozen housing market, guidance left unraised, and the leadership transition amid the CEO's medical leave remain caveats on the table.
Full Review
ClaudeComparable sales turned meaningfully positive after four years.
The quarter's most important figure was comparable sales up 1.7%, and 1.3% in the US. Home Depot had largely seen contraction or flat comps since 2022 as post-pandemic demand normalized and rates climbed. This quarter, both total and US comps beating the ~1% the market expected is the first concrete sign that demand may be bottoming. Customers visit less often but spend more when they do; average ticket rose to $92.50. Notably, big-ticket transactions over $1,000 rising 2.4% year over year points to a partial revival in deferred large projects. Management described this as 'broad-based demand.' Still, several more quarters are needed to see whether a single-quarter turn becomes a durable trend.
Growth is powered by the SRS and GMS acquisitions.
Total revenue grew 5.7% while comparable sales rose only 1.7%, showing that the roughly 4-point gap comes largely from acquisitions and new stores. Over the past two years Home Depot added SRS Distribution (roofing, landscape and pool supply distribution) and, through SRS, GMS (drywall and building products). These deals accelerate the company's expansion from a DIY-consumer tilt toward professional-contractor and large-project supply. Amortization of acquired intangibles was $244M over six months, mostly SRS-related. The strategy is sound: with home buying and selling frozen, renovation and professional-repair spending is a relatively more resilient demand pool. But this growth is not organic; the acquisition contribution will fade on base effects in coming quarters, at which point organic comp performance becomes more decisive.
Housing is frozen and large projects remain pressured.
CFO Richard McPhail said the housing market remains 'frozen' and that, given roughly 6.7% mortgage rates, they see no inflection point in the near term. Housing turnover has been at record lows for four years; because people are not buying or selling homes, move-related large renovation spending is also weak. That means Home Depot's highest-margin and most cyclical demand line is still not running at full capacity. The company is currently growing on the back of small and mid-size projects, the professional customer, and durable maintenance-and-repair demand. When rate cuts become clearer and housing mobility returns, this segment could provide the biggest upside; but that hinges on a macro variable outside Home Depot's control, with uncertain timing.
Guidance was reaffirmed, not revised upward.
Management reiterated its fiscal 2026 outlook unchanged: total sales growth of 2.5%–4.5%, comparable sales flat to 2%, adjusted operating margin of 12.8%–13.0%, and adjusted EPS growth of flat to 4% off a $14.69 base. Despite the comp beat, leaving guidance unraised was read cautiously and was one of the main reasons the premarket premium faded intraday. Management's rationale may be macro uncertainty in the second half and tough comparison bases. For investors, this means the quarter was good but not 'surprisingly good'; the company kept its word but did not lift the bar. On valuation, the stock trades at ~23x earnings, and the projected ~2% profit growth supports that multiple with a stability-and-dividend story rather than a growth story.
Strengths
5- Comparable sales turned positive at 1.7% after nearly four years of weakness, with US comps up 1.3%.
- Big-ticket transactions over $1,000 rose 2.4% year over year, a sign of partial revival in deferred large projects.
- SRS and GMS acquisitions expanded the professional-customer and large-project distribution business, lifting growth above comps.
- Adjusted EPS of $4.92 beat both the year-ago figure and the market estimate, with operating income up 4.3%.
- Full-year guidance was reaffirmed; $4.6B in dividends paid in the first half sustains strong cash distribution.
Risks
5- Housing is 'frozen' at ~6.7% mortgage rates; turnover is at record lows and large renovation demand is pressured.
- Total revenue of $47.9B came in below the most ambitious $48.7B estimate, a slight top-line miss.
- Despite the comp beat, management did not raise guidance; the market had expected an upward revision.
- A significant share of growth comes from acquisitions; once base effects fade, organic comps become more decisive.
- CEO Ted Decker is on medical leave; the interim leadership arrangement creates a governance uncertainty.
What to Watch
3- Q3 fiscal 2026 results land ~November 2026, testing whether the comp turn is durable.
- The Fed rate path and mortgage-rate trajectory are the key catalyst for housing mobility and large-project demand.
- Watch SRS/GMS integration's contribution to Pro segment revenue and the fading acquisition base effect.
Upcoming Earnings
To Understand This