Key Takeaways
- Q1 revenue climbed 4.8% year-over-year to $41.77 billion, surpassing analyst projections, though earnings per share declined to $3.43 from $3.56
- Shares dropped temporarily under $290, marking the weakest price point since the end of 2023 and lifting dividend yield past 3%
- Comparable store sales increased a modest 0.6%, while U.S. locations saw comps rise just 0.4%
- The company maintained its full-year sales growth forecast of 2.5%ā4.5% without any upward revision
- Wall Street analysts maintain a “Moderate Buy” consensus with a mean price target reaching $392.45
Home Depot exceeded Wall Street expectations for both revenue and earnings in its first quarter, yet shares tumbled to their lowest point in two years. While the results looked solid on paper, they failed to inspire confidence about the retailer’s near-term trajectory.
Shares momentarily traded beneath $290 on Tuesday after the quarterly report, a threshold last breached in late 2023. HD has recovered modestly since, hovering near $302, though this remains significantly below the 52-week peak of $426.75.
First-quarter fiscal 2026 revenue reached $41.77 billion, representing a 4.8% increase from the prior year and exceeding the Street’s $41.59 billion projection. Earnings per share landed at $3.43, topping the $3.41 consensus but falling short of last year’s $3.56 figure.
Comparable sales metrics painted a more subdued picture. Total comp sales advanced just 0.6%, while domestic comps managed only 0.4% growth. Customer traffic weakened, with comparable transactions declining 1.3%, although those who visited stores increased their spending. The average transaction value climbed 2.3% to $92.76.
Executives offered a realistic assessment of market conditions. VP of Merchandising Billy Bastek noted the company isn’t “looking at a marked improvement in underlying demand,” explaining that anticipated second-half comp improvements depend on typical storm season patterns rather than fundamental consumer strength.
Full-Year Outlook Unchanged
Home Depot maintained its fiscal 2026 projections without adjustment. The retailer continues to anticipate total sales growth between 2.5% and 4.5%, with adjusted earnings per share projected flat to up 4%. The analyst community forecasts full-year EPS of $15.02.
CFO Richard McPhail pointed to consumer headwinds including elevated fuel costs and affordability challenges. The residential real estate market continues to weigh on performanceāpersistent high mortgage rates have kept home sales at multi-decade lows, which typically postpones larger renovation spending that drives Home Depot’s strongest growth periods.
Return on invested capital decreased to 25.4% compared to 31.3% in the year-ago period, partially impacted by debt associated with recent strategic acquisitions.
Expanding the Professional Segment
Home Depot has leveraged the slower consumer environment to bolster its Professional contractor business. The $18.25 billion SRS Distribution purchase in 2024 significantly expanded its addressable market. Subsequent additions included building materials distributor GMS, while SRS recently completed the acquisition of Mingledorff’s, an HVAC distribution company operating 42 facilities throughout the Southeast.
Company leadership estimates these strategic moves 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% in February to $2.33 per share, establishing an annualized yield around 3.1% at present trading levelsāabove its 10-year historical average of approximately 2.4%. The retailer has now distributed dividends for 156 straight quarters.
Institutional ownership remains robust. IFP Advisors expanded its HD holdings by 16.1% during Q4, purchasing an additional 4,369 shares. Multiple analysts adjusted price targets downward following the earnings release, though the overall consensus holds at “Moderate Buy” with a mean target of $392.45.
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