Overview
Since the Report − 6.4%
Revenue grew 5.7% year over year, EPS beat the estimate by 0.9%; the stock rose 0.7% in its first reaction.
- RevenueQ2
- $47.9B
- ▲ 5.7% YoY
- Comparable Sales
- ▲ 1.7%
- US ▲ 1.3%
Verdict
BUYHome Depot grew Q2 revenue 5.7% year over year to $47.9B; comparable sales rose 1.7% after nearly four years of weakness, and adjusted EPS of $4.92 beat estimates. Despite a still-'frozen' housing market, 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.
Close on Report DayAug 18
$340.33▲ 0.7%Report-Day Move
- Market Cap(Today)
- ≈ $318 B
- 1Y Return(At Report)
- − 12%
- P/E(At Today's Price · $14.80 · Trailing 12M)
- 21.5
- PEG(Company Guidance 2026)
- 10.76
- Net Margin(Trailing 12M)
- 8.4%
Earnings Summary
In 30 Seconds- Revenue rose 5.7% year over year to $47.86B, and adjusted EPS of $4.92 beat the estimate by 0.9%.
- Comparable sales grew 1.7%; transactions fell 1.0% while average ticket rose 2.8%.
- The stock gave back its premarket gain as guidance was only reaffirmed, not raised, and closed up 0.7%.
The Numbers
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
Q2 25 · $45.3 B
41.40
Q3 25 · $41.4 B · QoQ − 8.6%
38.20
Q4 25 · $38.2 B · QoQ − 7.7%
41.77
Q1 26 · $41.8 B · QoQ + 9.3%
47.86
Q2 26 · $47.9 B · QoQ + 14.6% · YoY + 5.7%
~42–43
Q3 26E · ~42–43 · QoQ − 11.2% · YoY + 2.7%
- Q2 25
- Q3 25
- Q4 25
- Q1 26
- Q2 26
- Q3 26E
Q3 FY26 Company Guidance
- Total Sales Growth2.5% – 4.5%2.5%4.5%
Full Year · ReaffirmedUnchanged
- Comparable Sales0% – 2%0%2%
Full-Year TargetFlat to Slightly Positive
- Adjusted EPS Growth0% – 4%0%4%
Base $14.69 · Mid ~2%Unchanged
- Adjusted Operating Margin12.8% – 13.0%12.8%13.0%12.8% – 13.0%
GAAP Margin 12.4%–12.6%Maintained
- Gross Margin33.1%
Single-Point Year TargetFlat Trend
How to Read the Chart
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. When the company gave a single number rather than a range and no market expectation is known, that row gets no band at all: there is no length to measure and no position to compare. Axis is ±115% around the midpoint.
Segment and KPI Data
Revenue by Segment
- Primary Segment$42.8 BShare 89.4%▲ 1.5% YoY
- Other Segment$5.06 BShare 10.6%▲ 62.0% YoY
Key Metrics
Comparable Customer Transactions
− 1.0%
Press Release
Comparable Average Ticket
2.8%
Press Release
Operating Cash Flow (First Half)
$11.4 B
Press Release
Capital Expenditures (First Half)
$1.72 B
▲ 0.1% YoYPress Release
Dividends Paid (First Half)
$4.64 B
▲ 1.5% YoYPress Release
Building Materials Sales
$14.4 B
▲ 1.5% YoY10-Q
Décor Sales
$13.9 B
▲ 0.9% YoY10-Q
Hardlines Sales
$14.4 B
▲ 2.3% YoY10-Q
Shares are computed over the segment total: $47.9 B. Source: 10-Q.
Metrics come only from the company's own filings; each one names the document it was taken from.
“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 and Review
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%. The company had endured nearly four years of weakness on this metric, so turning positive marks a critical threshold. US comparable sales rose 1.3%; both were above the ~1% the market expected. Adjusted EPS of $4.92 beat both the year-ago $4.68 and the $4.88 estimate. Average ticket was $92.50.
The stock reacted in a measured but positive way. A premarket gain above 2% eroded, and shares closed up 0.7% at $340.33. Investors focused on comps turning positive after a long drought. Big-ticket transactions over $1,000 rising 2.4% also hinted at a modest revival in deferred large projects. On the other side, total revenue came in below the most ambitious $48.7B estimate. Management also reaffirmed rather than raised its full-year guidance. Those two factors offset the enthusiasm.
Our view is cautiously positive. A housing market frozen by high mortgage rates keeps suppressing large renovation demand. Against that, the SRS and GMS acquisitions expanded the professional-customer and large-project distribution business. The reaffirmed guidance signals stability. Analysts lean 'buy' with a $374.69 average target, ~10% upside. We assign a score of 76 and a 'buy' rating; comp inflection and acquisition contribution are positive. Frozen housing, unraised guidance and the leadership transition during the CEO's medical leave remain caveats.
Full Review
Comp 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 and total transactions came in at 443.2 million. 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'. On the profit side, operating income rose 4.3% to $6.84B and GAAP EPS was $4.79. 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'. 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% and comparable sales flat to 2%. Adjusted operating margin is guided to 12.8%–13.0%, with adjusted EPS growth of flat to 4% off a $14.69 base. Despite the comp beat, leaving guidance unraised was read cautiously. It 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. The projected ~2% profit growth supports that multiple with a stability-and-dividend story rather than a growth story. The line to watch in November's Q3 report: whether comps hold the 1.7% turn and approach the top of the flat-to-2% full-year range.
Looking Ahead
Strengths and Risks
5 Strengths · 5 RisksStrengths
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 ratesTurnover 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 guidanceThe market had expected an upward revision.
- A significant share of growth comes from acquisitionsOnce base effects fade, organic comps become more decisive.
- CEO Ted Decker is on medical leaveThe 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