Home Depot Q2 Net Sales Rise 5.7% YoY to Beat Estimates, Shares Buck Trend to Gain Over 1%

TradingKey - On August 18 EST, Home Depot (HD) released its Q2 fiscal 2026 earnings report before the U.S. market open. During the period, Home Depot's net sales grew 5.7% year-over-year to $47.861 billion, exceeding market expectations of $47.24 billion.

Following the earnings release, Home Depot's stock price bucked the market trend and strengthened, rising 1.01% to trade at $341.30 as of press time.

Home Depot stock price chart, Source: TradingView

Same-store sales increased 1.7% year-over-year, accelerating from 1.0% in the same period last year, with U.S. comparable sales up 1.3%. By breakdown, growth was mainly driven by average ticket size. Comparable average ticket rose 2.8% year-over-year to $92.50, while comparable customer transactions fell 1.0% year-over-year. Quarterly transactions totaled 443.2 million, down 0.8% year-over-year.

On the profitability front, under GAAP, Home Depot's Q2 net income reached $4.766 billion, up 4.7% year-over-year; diluted earnings per share were $4.79, up 4.6% year-over-year. Under non-GAAP, adjusted diluted earnings per share were $4.92, up 5.1% year-over-year, topping market expectations of $4.73.

Operating profit came in at $6.839 billion, up 4.3% year-over-year. GAAP operating margin was 14.3% (compared to 14.5% in the prior-year period), and adjusted operating margin was 14.7% (compared to 14.8% in the prior-year period), reflecting slight pressure on margins.

Richard McPhail, Executive Vice President and CFO of the company, stated: "Our second-quarter performance exceeded our expectations. As customers continued to invest in smaller projects, we saw broad-based demand across categories."

Regarding guidance, the company reaffirmed its fiscal 2026 outlook. Total sales growth is projected at approximately 2.5% to 4.5%; same-store sales growth is expected to be flat to 2.0%; approximately 15 new stores will open; gross margin is projected at around 33.1%; operating margin is expected to be around 12.4% to 12.6%, and adjusted operating margin around 12.8% to 13.0%.

Diluted earnings per share are expected to be flat to up approximately 4.0% compared to $14.23 in fiscal 2025, while adjusted diluted earnings per share are expected to be flat to up approximately 4.0% from $14.69, implying an estimated range of $14.69 to $15.28.

The company noted that the guidance includes the impact of IEEPA tariff refunds, which are expected to partially offset unplanned fuel, energy, and other product input costs in the current fiscal year. Current market expectations for fiscal 2026 sales of $170.98 billion and adjusted EPS of $14.95 fall within the company's guidance range.

Following the earnings release, DA Davidson analyst Michael Baker maintained a "Buy" rating on Home Depot with a target price of $377. Telsey Advisory analyst Joe Feldman maintained a "Buy" rating on Home Depot and kept his price target at $410.