Home Depot's Downturn: Sector-Wide Slump or Retailer's Unique Struggle?

Home Depot (HD) shares slumped in premarket trading on November 18, 2025, after the home-improvement retailer reported third-quarter fiscal 2025 earnings that missed profit expectations and slashed its full-year outlook. The stock, down roughly 2–3%, underperformed broader market benchmarks, reflecting investor concern over a prolonged housing-market slump and weak consumer demand for big-ticket projects.

The company reported adjusted earnings per share (EPS) of $3.74, falling short of the $3.81–$3.84 consensus estimate, while net sales rose 2.8% to $41.4 billion, slightly above forecasts. However, the positive revenue beat was overshadowed by a 0.2% increase in comparable sales—well below the 1.3% growth anticipated by analysts—and a 5% downward revision to full-year adjusted EPS guidance. CEO Ted Decker attributed the underperformance to a lack of storm-driven demand, ongoing housing-market pressures, and consumer uncertainty, which dampened sales in key categories like roofing and generators.

Home Depot's results highlight the challenges facing the home-improvement sector amid a cooling housing market. While the company's acquisition of GMS Inc. contributed about $900 million in revenue, underlying organic growth remained sluggish, with transaction volumes declining 1.6% year-over-year. The average ticket rose 1.8%, driven by inflation and professional customer projects, but this offset was insufficient to counteract the drop in customer visits.

The profit warning sent ripples through Wall Street. Stifel downgraded HD from "Buy" to "Hold" earlier in the week, citing concerns over same-store sales and the housing slowdown. Analysts now project adjusted EPS for fiscal 2025 to fall 5% versus the prior forecast of a 2% decline, despite a modestly raised sales growth outlook to 3%. The guidance cut underscores the company's struggle to balance margin pressures—stemming from higher operating expenses and mix shifts—with its long-term growth strategy.

Institutional investors have taken mixed stances. While Empowered Funds LLC and Parnassus Value Equity Fund added to their stakes in Q2 and October 2025, respectively, insiders sold nearly 49,000 shares valued at $19.6 million in the last quarter. This contrast reflects both long-term confidence in Home Depot's market dominance and short-term caution amid cyclical headwinds.

Looking ahead, the company's outlook hinges on macroeconomic factors. A stabilization in housing activity and potential Fed rate cuts could reignite demand for home projects, but persistent high rates and affordability issues may prolong the downturn. Home Depot's earnings call later Tuesday and Lowe's results due Wednesday will provide further clarity on whether the slowdown is sector-wide or a Home Depot-specific issue.

For now, the stock trades at a forward P/E of 24.34, a premium for a retailer facing decelerating growth. Analysts remain split, with a "Moderate Buy" consensus rating and a $429.33 average price target, but the recent earnings miss has intensified scrutiny over the company's ability to navigate a weak housing cycle.