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Home Depot Fiscal Second-Quarter Results Top Street Views; Maintains Full-Year Outlook

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Home Depot Fiscal Second-Quarter Results Top Street Views; Maintains Full-Year Outlook

Home Depot (HD) reported fiscal second-quarter results above Wall Street's estimates as customers continued to take on smaller projects, while the home improvement retailer reaffirmed its full-year outlook.

The company on Tuesday posted adjusted earnings of $4.92 a share for the quarter ended Aug. 2, up from $4.68 the year before, topping the FactSet-polled consensus of $4.73. Sales improved 5.7% to $47.86 billion, ahead of the Street's view for $47.24 billion.

Home Depot's shares rose 2% in the most recent premarket activity.

"Our second quarter results exceeded our expectations," Chief Financial Officer Richard McPhail said in a statement. "We saw broad based demand across the business as customers continued to engage in smaller projects."

In the second quarter, comparable sales advanced 1.7% at the company level, exceeding the market's forecast for growth of 0.9%, and were up 1.3% in the US. The number of transactions decreased 0.8% to 443.2 million, while the average ticket rose 2.8% to $92.50.

For fiscal 2026, the retailer continues to project adjusted EPS to be flat to up 4% from the previous fiscal year's result of $14.69. The Street is looking for non-GAAP EPS of $14.95.

Sales are still pegged to grow by about 2.5% to 4.5%, while the retailer also reiterated its comparable sales guidance range of flat to up 2%. The average analyst estimate on FactSet is for sales of $170.98 billion, representing a year-over-year gain of 3.8%, while same-store sales are expected to rise 1.1%.

The outlook includes International Emergency Economic Powers Act tariff refunds, which the retailer expects to partially offset unplanned fuel, energy and other product input costs throughout the fiscal year, it said.

"While not clear, the inclusion of the tariffs and no change in the aggregate guide could suggest a bit more margin pressure than previously anticipated in (the second half) from a higher cost environment," Truist Securities said in a Tuesday client note.

The US Supreme Court earlier this year ruled that the Trump administration lacked authority under IEEPA to impose certain tariffs, paving the way for refunds to companies that had paid the duties.

Truist said tariff-related refunds may have helped Home Depot's margins in the quarter. "This was the company's seventh straight quarter of positive US comps and their best two-year stack since (the second quarter of fiscal 2023)," according to the brokerage.

Last week, Oppenheimer said the second-quarter results of Home Depot and rival Lowe's (LOW) were unlikely to show meaningful signs of recovery amid persistent macroeconomic pressures.

Lowe's is scheduled to release its latest financial results on Wednesday.

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