Home Depot Just Beat Expectations — Is This the Housing Market Turning Point Investors Have Been Waiting For?

Home Depot delivered a better-than-feared fourth quarter, beating earnings and revenue expectations while holding the line on full-year guidance in what management continues to describe as a “frozen” housing environment. The stock rose in premarket trading and reclaimed its 200-day moving average near $376, a key technical level that could now act as support if investors view the print as a stabilization point rather than just a relief bounce.

For the fiscal fourth quarter, revenue fell 3.8% year over year to $38.20 billion, at the high end of consensus estimates around $38.12–$38.21 billion. Adjusted EPS came in at $2.72, comfortably above expectations of roughly $2.54–$2.55. Reported EPS was $2.58 versus $3.02 a year ago, with the prior year benefiting from a 14th week that added approximately $2.5 billion in sales and about $0.30 to EPS, making the headline declines less severe on a normalized basis.

Comparable sales rose 0.4% overall and 0.3% in the U.S., a notable upside versus expectations for a decline of roughly 0.3%. Transactions fell 1.6% year over year, but average ticket increased 2.4%, and big-ticket purchases over $1,000 rose 1.3%. That mix suggests fewer visits but larger baskets, with some of the lift likely tied to modest price increases and selective project spending.

Net income declined to $2.57 billion from $3.0 billion a year ago, reflecting the sales contraction and normalization from the extra week. Operating income was $3.85 billion, and fiscal 2025 adjusted EPS totaled $14.69 versus $15.24 in fiscal 2024. Still, for the full year, sales grew 3.2% to $164.7 billion, and comparable sales rose 0.3%, underscoring a business that is flat-to-slightly-growing rather than in outright contraction.

The key strategic divide remains Pro versus DIY. Management acknowledged that do-it-yourself customers have pulled back amid housing affordability concerns and elevated rates, but professional contractor sales were stronger in the quarter. While specific Pro growth figures were not disclosed, Home Depot continues to lean on its acquisitions of SRS Distribution and GMS to deepen its exposure to roofing, landscaping, and specialty building products. That Pro resilience is critical: larger, project-based demand tends to be stickier and less sentiment-driven than discretionary DIY remodeling.

Management commentary on the housing market was measured. CFO Richard McPhail described the U.S. as being in a “frozen housing environment for three years,” with little thaw so far. Consumers remain concerned about affordability and job stability, and that uncertainty is weighing on larger renovation projects typically tied to home turnover. However, McPhail said that adjusting for storm-related volatility, underlying demand was “relatively stable” throughout the year and that Home Depot continues to gain market share even as the broader category lags.

Margins are expected to remain steady. For fiscal 2026, Home Depot guided to gross margin of approximately 33.1% and operating margin of 12.4% to 12.6%, with adjusted operating margin of 12.8% to 13.0%. That stability suggests no dramatic deterioration from pricing pressure or mix, though cost discipline remains important. The company also announced a 1.3% dividend increase to $2.33 per share, marking its 156th consecutive quarterly dividend and reinforcing capital return consistency even in a muted demand environment.

On tariffs, management struck a cautious tone. Following the Supreme Court’s ruling and new tariff announcements from the Trump administration, the company said it is “still in the middle of our analysis.” More than half of Home Depot’s products are sourced domestically, and no single country outside the U.S. accounts for more than 10% of purchases, giving the retailer some flexibility. However, with potential new global tariffs and additional trade investigations under discussion, pricing risk remains an overhang until policy details solidify.

Looking ahead, fiscal 2026 guidance calls for total sales growth of 2.5% to 4.5%, comparable sales growth of flat to up 2%, and adjusted EPS growth of flat to up 4% from $14.69. Capital expenditures are expected to be approximately 2.5% of sales, and the company plans to open around 15 new stores. The outlook essentially reaffirms the December investor day framework, signaling steady but unspectacular recovery rather than a sharp rebound.

Today’s 9 a.m. conference call coincides with Case-Shiller and FHFA home price data, both important gauges of housing momentum. Housing stocks have been firm recently, as the administration has made affordable housing a policy priority and President Trump is expected to address the topic tonight. Any signal of stabilizing or cooling home prices, combined with mortgage rates drifting lower toward 6%, could support the “inflection point” narrative investors are looking for in home improvement demand.

Technically, the stock’s move back above its 200-day moving average near $376 is constructive. The earnings beat, positive comps surprise, stable guidance, and Pro strength likely provide enough fundamental backing to defend that level in the near term. However, sustaining upside will require either a clearer housing thaw or evidence in coming quarters that Pro growth can meaningfully offset DIY softness. For now, this report appears strong enough to stabilize sentiment and hold key support—but a full breakout likely depends on what housing data and policy signals deliver next.