Home Depot Set to Deliver Another Solid Quarter — U.S. Sales Poised for Third Straight Gain Amid Tariff and Rate Resilience

TradingKey - U.S. home improvement giant Home Depot (HD) will release its Q2 2025 earnings before the market opens on August 19. Analysts expect Home Depot to maintain its advantage in navigating tariff and interest rate challenges, with the company likely delivering another quarter of modest growth.

Analysts forecast:

• Q2 revenue: $45.39 billion, up 5.13% year-over-year
• EPS: $4.70, up 2.24% YoY

A key metric for Home Depot’s core performance — same-store sales — is expected to rise 1.4% YoY, reversing the 0.30% decline in Q1 and resuming the 0.80% growth seen in Q4 2024.

U.S. same-store sales are particularly important, as Trump’s tariffs and higher interest rates continue to impact consumer demand for home improvement. The consensus expects U.S. same-store sales to grow 1.6%, marking three consecutive quarters of positive growth.

Telsey Advisory Group analyst said home improvement demand trends are expected to improve over time, as consumers, facing high interest rates, no longer delay projects and instead adapt to the rate environment rather than wait for lower rates.

Morgan Stanley analysts remain cautious, stating that home improvement trends may remain lukewarm in the near term, and both Home Depot and Lowe’s may fall short of consensus expectations, although the sector may have already bottomed.

Nonetheless, the anticipated restart of Fed rate cuts could help break this demand stalemate.

Mizuho Securities noted that Home Depot’s stock has risen only 1.5% year-to-date, underperforming the S&P 500’s 10% gain, suggesting the market may have already priced in weak performance. The firm said the focus should now shift to signs of rate cuts and any imminent shifts in home improvement categories.

Beyond interest rate headwinds, analysts are optimistic about Home Depot’s ability to manage tariff policies. Last quarter, the company revealed plans to diversify its supply chain over the next year, ensuring that no single country outside the U.S. accounts for more than 10% of its procurement.

TradingKey analyst Mario Ma reminded investors to watch inventory management and supply chain risks, noting that successful inventory optimization and supply chain diversification would reduce cost risks and positively impact earnings.

Telsey analysts said that due to its best-in-class execution, digital prowess, and hybrid work-from-home arrangements causing more maintenance and repair activity, Home Depot should remain a long-term winner in retail. 

Bank of America believes that despite ongoing macroeconomic volatility, Home Depot is expected to continue gaining market share.