The Home Depot 2026 Q3 Earnings Mixed Performance as Net Income Dips 1.3%

The Home Depot (HD) reported fiscal 2026 Q3 earnings on Nov 17, 2025, delivering mixed results. While revenue surpassed expectations, EPS and net income declined, and the company revised guidance downward amid ongoing housing and consumer challenges.

Revenue

The total revenue of The Home Depot increased by 2.8% to $41.35 billion in 2026 Q3, up from $40.22 billion in 2025 Q3.

Earnings/Net Income

The Home Depot's EPS declined 1.4% to $3.63 in 2026 Q3 from $3.68 in 2025 Q3. Meanwhile, the company's net income declined to $3.60 billion in 2026 Q3, down 1.3% from $3.65 billion reported in 2025 Q3. Despite these declines, the company has sustained profitability for over 20 years in the corresponding fiscal quarter, underscoring strong operational resilience. The EPS and net income performance reflects a challenging earnings outlook despite revenue growth.

Price Action

The stock price of The Home Depot has edged down 0.86% during the latest trading day, has dropped 3.35% during the most recent full trading week, and has dropped 7.58% month-to-date.

Post-Earnings Price Action Review

The strategy of buying Home Depot (HD) shares on the day after earnings releases and holding for 30 days showed favorable performance over the past three years. The annualized return was 14.95%, with a maximum drawdown of 11.5% during volatile markets. This approach capitalized on the company's positive financial outlook, although the returns were modest compared to the broader market. It highlights the importance of considering both growth prospects and valuation risks in holding periods. The strategy benefited from Home Depot's consistent revenue growth and positive earnings reports, which boosted investor confidence in the company's future performance. The 11.5% drawdown during volatile markets shows the need for risk management strategies, such as setting stop-loss orders, to protect against potential declines. While this strategy worked well for HD, investors should consider diversifying their portfolios to manage risk and capitalize on opportunities in other sectors. In conclusion, the strategy of buying Home Depot shares on the day after earnings releases and holding for 30 days is a viable approach, but it should be part of a broader investment plan that includes risk management and diversification. The recent performance of Home Depot, with its consistent revenue growth and positive earnings reports, supports this strategy, but investors must remain vigilant to potential valuation risks.

CEO Commentary

Ted Decker, Chair, President and CEO, noted that third-quarter results missed expectations due to lack of storm activity, consumer uncertainty, and housing market pressures, which impacted home improvement demand. He emphasized stable sequential demand but highlighted unmet expectations for seasonal demand growth. Decker acknowledged strong team execution and market share gains, expressing gratitude for associates’ contributions. The tone reflects cautious optimism, balancing operational strengths with external challenges.

Guidance

The company updated fiscal 2025 guidance: total sales growth of ~3.0% (including $2.0B from GMS), slightly positive comparable sales, 12 new stores, 33.2% gross margin, 12.6% operating margin, 13.0% adjusted operating margin, 24.5% tax rate, $2.3B net interest expense, and diluted EPS decline of ~6.0% to $14.31 (vs. $14.91 in 2024), with adjusted diluted EPS decline of ~5.0% to $14.46 (vs. $15.24 in 2024). Capital expenditures will remain at ~2.5% of total sales.

Additional News

M&A Activity: The Home Depot’s recent acquisition of GMS Inc. contributed approximately $900 million to Q3 sales, reflecting strategic growth through expansion.

C-Level Commentary: CEO Ted Decker emphasized operational resilience despite challenges, noting market share gains and strong team execution.

Legal Victory: The company secured a legal ruling upholding its policy prohibiting employees from displaying “Black Lives Matter” on work aprons, reinforcing its apolitical workplace stance .