Home Depot Earnings Offer Glimmer Of Hope As Small Projects Offset Renovation Downturn

Home Depot reported stronger-than-expected second-quarter sales and profit as homeowners spent money on smaller do-it-yourself projects, giving the home-improvement retailer enough confidence to reaffirm its full-year outlook.

The frozen housing market, combined with elevated borrowing costs, has deterred homeowners from financing larger renovations, such as replacing exterior windows and doors or installing a new deck, and has also pressured Home Depot shares over the past year and a half.

However, second-quarter demand showed signs of resilience in smaller projects, including ceiling fan replacements, landscaping, gardening, and electrical upgrades.

“They are engaged in smaller projects, but we haven’t yet seen that combination of factors that unlocks larger projects,” CFO Richard McPhail said in an interview.

Comparable sales increased 1.7% in the quarter, beating the Bloomberg consensus estimate for a 0.94% gain. Revenue rose 5.7% to $47.86 billion, while adjusted earnings of $4.92 a share topped the $4.73 consensus estimate.

Here’s a snapshot of 2Q earnings:

• Comparable sales +1.7%, estimate +0.94% (Bloomberg Consensus)
• US comparable sales +1.3%, estimate +0.85%
• Net sales $47.86 billion, +5.7% y/y, estimate $47.33 billion
• Adjusted EPS $4.92 vs. $4.68 y/y, estimate $4.73
• EPS $4.79 vs. $4.58 y/y
• Average ticket sales $92.50, +2.8% y/y, estimate $91.70
• Merchandise inventories $26.85 billion, estimate $26.29 billion
• Total location count 2,364, estimate 2,365
• SG&A expense $8.42 billion, +8.5% y/y, estimate $8.17 billion

Home Depot maintained its forecast for annual revenue growth of 2.5% to 4.5%, with comparable sales ranging from unchanged to 2% higher. The company said tariff refunds should help offset rising fuel costs.

Barclays analyst Seth Sigman told clients, “HD reported better 2Q26 results, with broad-based demand driving better sales, while EPS was well managed and benefited from tariff refunds. The sales improvement should be the key takeaway as trends continue to gradually improve despite limited progress on the housing front.”

Home Depot shares are up a little more than 2% in premarket trading. Shares are flat on the year and about 21% below their 2024 peak.

DA Davidson analyst Michael Baker wrote earlier today that the earnings results “doesn’t mean we’re out of the woods yet with respect to home-related spending, particularly as rates continue to move back up.” He noted, “But it does show that the worst of the cycle downtrend is likely behind us.”