Key Takeaways
- Home Depot’s Q1 revenue climbed 4.8% year-over-year to $41.77 billion, surpassing analyst projections, though earnings per share of $3.43 declined from $3.56 in the prior-year period
- Shares temporarily dropped beneath $290, marking the lowest point since the end of 2023 and pushing the dividend yield over 3%
- Comparable store sales increased a modest 0.6%, while U.S. comp sales inched up merely 0.4%
- Company executives maintained their full-year outlook calling for 2.5%–4.5% sales expansion without raising projections
- Wall Street analysts maintain a “Moderate Buy” consensus rating with a mean price objective of $392.45
Home Depot delivered quarterly results that exceeded Wall Street expectations, yet shares plummeted to their lowest valuation in two years. While the financial performance was solid, it failed to inspire confidence about future growth prospects.
Shares momentarily slipped under the $290 threshold on Tuesday in the aftermath of the earnings release, representing a price point unseen since the closing months of 2023. HD stock has experienced a modest rebound since then, currently changing hands near $302, though that remains substantially below the 52-week peak of $426.75.
First-quarter fiscal 2026 revenue reached $41.77 billion, representing a 4.8% increase from the corresponding period last year and topping the consensus forecast of $41.59 billion. Earnings per share of $3.43 exceeded the $3.41 analyst estimate, despite representing a decline from the $3.56 reported in the year-ago quarter.
Comparable store sales — the metric that strips out new store openings — painted a more subdued picture. Total comp sales advanced just 0.6%, while U.S. comp sales managed only a 0.4% gain. Customer traffic weakened, with comparable transactions declining 1.3%, although shoppers who visited stores increased their spending. The average transaction value climbed 2.3% to $92.76.
Company leadership spoke frankly about the road ahead. VP of Merchandising Billy Bastek noted the firm is “not looking at a marked improvement in underlying demand,” explaining that anticipated stronger second-half comparable sales would stem from a return to typical storm patterns — rather than any fundamental improvement in consumer spending.
Full-Year Outlook Unchanged
Home Depot maintained its fiscal 2026 full-year projections. Total revenue growth remains targeted at 2.5% to 4.5%, with adjusted earnings per share expected to be flat to up 4%. Wall Street analysts are projecting full-year EPS of $15.02.
CFO Richard McPhail recognized that shoppers are experiencing strain from elevated gasoline costs and ongoing affordability challenges. The residential real estate market continues to act as a headwind — mortgage rates have remained stubbornly high, keeping home sales activity near multi-decade lows, which typically postpones the larger remodeling projects that fuel HD’s strongest performance.
Return on invested capital decreased to 25.4% from 31.3% in the year-ago period, partially impacted by debt associated with recent strategic acquisitions.
Expanding Professional Contractor Services
Home Depot has been leveraging the current slowdown to strengthen its Professional contractor business segment. The $18.25 billion purchase of SRS Distribution in 2024 unlocked access to a substantial new market opportunity. The retailer subsequently acquired building materials distributor GMS, and just this month SRS completed its purchase of Mingledorff’s, an HVAC distribution company operating 42 facilities throughout the southeastern United States.
Company leadership calculates these strategic acquisitions expand Home Depot’s total addressable market to approximately $1.2 trillion, with HVAC distribution contributing roughly $100 billion to that figure.
Regarding shareholder returns, HD increased its quarterly dividend 1.3% this past February to $2.33 per share, establishing an annualized yield of approximately 3.1% at present trading levels — higher than its 10-year average of about 2.4%. The retailer has now distributed dividends for 156 consecutive quarters without interruption.
Institutional ownership continues to show support. IFP Advisors expanded its HD holdings by 16.1% during Q4, purchasing an additional 4,369 shares. Multiple analysts reduced their price targets following the quarterly report, though the overall consensus rating remains “Moderate Buy” with an average target price of $392.45.
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