Key Highlights
- Q1 revenue climbed 4.8% year-over-year to $41.77 billion, surpassing analyst projections, while EPS of $3.43 declined from $3.56 in the prior-year period
- Shares temporarily dropped below $290, marking the lowest point since the end of 2023 and lifting the dividend yield beyond 3%
- Comparable store sales increased a modest 0.6%, with U.S. locations posting just 0.4% growth
- Company executives maintained their full-year sales growth forecast of 2.5%–4.5% without any upward revision
- Wall Street analysts maintain a “Moderate Buy” consensus rating with a mean price objective of $392.45
Home Depot delivered better-than-expected financial results for the first quarter, yet shares tumbled to their lowest level in two years. While the performance was solid on paper, it failed to inspire confidence about future momentum.
Shares temporarily fell beneath the $290 threshold on Tuesday after the earnings release, a price point last observed in late 2023. HD has since rebounded modestly to approximately $302, though it remains significantly below its 52-week peak of $426.75.
First-quarter fiscal 2026 revenue reached $41.77 billion, representing a 4.8% increase from the previous year and exceeding the Wall Street consensus of $41.59 billion. Earnings per share of $3.43 topped analyst expectations of $3.41, despite declining from $3.56 recorded during the comparable quarter last year.
Comparable store sales — a critical metric for retail health — painted a more subdued picture. Total comp sales advanced only 0.6%, while domestic comparable sales managed just 0.4% growth. Customer traffic declined, with comparable transactions falling 1.3%, though the customers who visited spent more per trip. Average transaction value increased 2.3% to $92.76.
Company leadership spoke frankly about market conditions. VP of Merchandising Billy Bastek indicated the business is “not looking at a marked improvement in underlying demand,” noting that anticipated second-half comparable sales improvements would stem from normal storm season activity — not broad-based consumer strength.
Annual Outlook Unchanged
Home Depot maintained its fiscal 2026 full-year projections without adjustment. Total sales expansion remains targeted at 2.5% to 4.5%, with adjusted earnings per share expected to range from flat to up 4%. Wall Street analysts currently project full-year EPS of $15.02.
CFO Richard McPhail recognized that shoppers are grappling with elevated gas prices and broader affordability challenges. The housing sector continues to apply pressure — mortgage rates remain high, keeping home sales activity near multi-decade lows, which typically postpones major renovation work that fuels Home Depot’s strongest growth periods.
Return on invested capital decreased to 25.4% from 31.3% in the year-ago period, partially impacted by debt taken on for recent acquisitions.
Expanding the Professional Segment
Home Depot has leveraged the slower retail environment to strengthen its Professional contractor business. The $18.25 billion purchase of SRS Distribution in 2024 significantly expanded the company’s addressable market. Subsequent deals included building materials distributor GMS, and this month SRS completed the acquisition of Mingledorff’s, an HVAC distribution company operating 42 facilities throughout the southeastern United States.
Company leadership estimates 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, yielding approximately 3.1% at current trading levels — above its historical 10-year average of around 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 the fourth quarter, purchasing an additional 4,369 shares. Multiple analysts reduced their price targets following the quarterly report, though the overall consensus maintains a “Moderate Buy” rating with an average target price of $392.45.
