The Home Depot 2026 Q1 Earnings Misses Targets as Net Income Declines 4.6%

The Home Depot (HD), ranking 23rd by market capitalization, reported its fiscal 2026 Q1 earnings on May 19th, 2025. The company's earnings results fell short of expectations, with net income declining 4.6% year-over-year to $3.43 billion. Despite the earnings drop, Home Depot reaffirmed its fiscal 2025 guidance, projecting total sales growth of approximately 2.8% and comparable sales growth of 1.0%. Analysts had anticipated a relatively uneventful quarter, focusing more on the company's forecasts for the rest of the year. Home Depot's stock rose over 2% in premarket hours following the announcement.

Revenue
The total revenue of The Home Depot increased by 9.4% to $39.86 billion in 2026 Q1, up from $36.42 billion in 2025 Q1.

Earnings/Net Income
The Home Depot's EPS declined 4.9% to $3.46 in 2026 Q1 from $3.64 in 2025 Q1. Meanwhile, the company's net income declined to $3.43 billion in 2026 Q1, down 4.6% from $3.60 billion reported in 2025 Q1. Remarkably, the company has sustained profitability for more than 20 years over the corresponding fiscal quarter, underscoring strong operational resilience. The EPS performance suggests moderate challenges in maintaining earnings growth.

Price Action
The stock price of The Home Depot has edged up 1.39% during the latest trading day, has edged up 0.74% during the most recent full trading week, and has jumped 9.65% month-to-date.

Post-Earnings Price Action Review
The strategy of buying Home Depot (HD) shares following a revenue drop quarter-over-quarter on the financial report release date and holding for 30 days yielded a 57.10% return, slightly underperforming the benchmark's 92.95% return over the same period. The strategy's CAGR was 9.49%, with a maximum drawdown of -35.17% and a Sharpe ratio of 0.39, indicating moderate returns and risk. Despite the strategy's lower-than-benchmark performance, it reflects a consistent approach with a reasonable risk-reward balance. Investors may find this strategy a viable option, particularly in fluctuating market conditions, as it suggests potential profitability amid short-term price movements. Overall, the strategy's performance showcases a blend of caution and opportunity, allowing investors to navigate market volatility with calculated expectations.

CEO Commentary
“Our first quarter results were in line with our expectations as we saw continued customer engagement across smaller projects and in our spring events,” said Ted Decker, Chair, President, and CEO. He expressed confidence in the company’s readiness and product assortment as spring progresses, highlighting the dedication of their associates.

Guidance
The company reaffirms its guidance for fiscal 2025, expecting total sales growth of approximately 2.8% and comparable sales growth of around 1.0%. The outlook includes approximately 13 new stores, a gross margin of about 33.4%, and an operating margin of approximately 13.0%. Diluted earnings per share are projected to decline approximately 3% from $14.91 in fiscal 2024.

Additional News
In recent developments, Home Depot has nominated Asha Sharma, Microsoft's corporate vice president and head of product, AI platform, for election to its Board of Directors, highlighting the company's focus on integrating advanced technology expertise into its leadership. Additionally, Home Depot's Foundation has allocated more than $5.5 million towards disaster preparedness and rebuilding efforts, reflecting its commitment to community support and resilience. The company has also expanded its tax-free shopping program for military families, offering eligible military exchange customers broader access to over 2 million products, further enhancing its support for service members. These strategic initiatives underscore Home Depot's dedication to strengthening its community impact and leadership capabilities.