Home Depot beats Q1 expectations, maintains full-year outlook

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Home Depot Q1 earnings beat

Highlights

Home Depot reported Q1 adjusted EPS of $3.43 and revenue of $41.77 billion, both beating LSEG forecasts, and reaffirmed full-year guidance.
Home Depot maintains fiscal 2026 sales growth guidance of 2.5%-4.5% and adjusted EPS growth as high as 4%, both above current analyst consensus.
In 2024, Home Depot acquired SRS Distribution for $18.25 billion to expand its pro customer business into a $100 billion HVAC market amid lower housing turnover.

Quarter results and guidance outlook

As reported by CNBC, Home Depot says its core homeowner customer remains relatively resilient despite higher gas prices, geopolitical tensions and a weak housing backdrop. The company reaffirmed its full-year forecast after posting fiscal first-quarter adjusted earnings per share of $3.43, above the $3.41 expected by analysts surveyed by LSEG, while revenue reached $41.77 billion, ahead of the $41.52 billion consensus.

Net income for the three months ended May 3 was $3.29 billion, or $3.30 per share, down from $3.43 billion, or $3.45 per share, a year earlier. Excluding one-time items, including costs tied to certain intangible assets, adjusted earnings per share came in at $3.43, while sales rose nearly 5% from $39.86 billion a year earlier.

Home Depot continues to expect fiscal 2026 sales growth of 2.5% to 4.5%, compared with LSEG expectations of about 4%. It also expects adjusted earnings per share growth of as much as 4%, above analyst expectations for 2.4% growth.

Housing pressure and pro market expansion

Finance chief Richard McPhail says homeowners are still spending, but only to a point, with many continuing to defer larger projects. That pattern persists as the home improvement sector faces lower housing turnover, economic uncertainty and ongoing hesitation around higher-ticket renovation work.

Earlier in the year, falling mortgage rates had raised hopes of improving demand, but that outlook weakened after the conflict in the Middle East began and mortgage rates rose again. Home Depot says it is responding by building out its professional customer business, which already accounts for about half of revenue.

That strategy includes recent acquisitions aimed at contractors and specialty trade buyers. In 2024, Home Depot acquired SRS Distribution for $18.25 billion, and last year it bought specialty building products distributor GMS. Last week, SRS completed its acquisition of Mingledorff's, a wholesale distributor of HVAC equipment, parts and supplies, a deal that Home Depot says expands its reach into a market worth about $100 billion and supports its push for a greater share of the $700 billion pro market.

Our earlier report on the recent spike in U.S. Treasury yields explained how higher borrowing costs and inflation worries were increasing volatility and weighing on rate-sensitive equities, including housing and consumer-linked stocks. We noted that elevated energy prices and still-high rates could squeeze household spending and further pressure housing activity, creating additional headwinds for home-improvement retailers.

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