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Zacks Investment Ideas feature highlights: Home Depot and Lowe's
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For Immediate Release
Chicago, IL – August 20, 2025 – Today, Zacks Investment Ideas feature highlights Home Depot (HD - Free Report) and Lowe’s (LOW - Free Report) .
Home Depot Reports 2nd Consecutive Earnings Miss
The second-quarter earnings season continues to wind down as more than 90% of S&P 500 companies have now reported results. Still, 15 S&P 500 members will report quarterly earnings this week, with the docket dominated by the retail sector.
Earnings out of home improvement retailers Home Depot and Lowe’s reflect notable reports, with the former kicking things off this morning with its second consecutive EPS miss. Both companies remain a Zacks Rank #3 (Hold) and are part of the Zacks Retail – Home Furnishings industry group.
This group currently ranks in the bottom 16% out of approximately 250 Zacks Ranked Industries and has lagged the general market by a wide margin year-to-date. Most stocks in this industry are relatively overvalued and expected to experience below-average earnings growth.
A primary reason for the underperformance is the broader operating environment, which remains a difficult one for these home improvement chains. Home Depot and Lowe’s face countless headwinds, perhaps most notably the elevated interest rate backdrop.
The home improvement sector has witnessed a sharp slowdown over the last few years as high mortgage rates and rising home prices stifled demand. Alongside the rate environment, weakness around discretionary spending is also a concern.
Despite the less-than-ideal setting, Home Depot appears to have executed quite well. On a positive note, upcoming rate cuts from the Federal Reserve are expected to reduce borrowing costs for homeowners looking to renovate their properties, benefiting these home improvement retailers.
Home Depot Misses Estimates as Big Projects Remain on Hold
Home Depot reported its second-quarter results on Tuesday morning before the opening bell, missing expectations on both the top and bottom lines. The slowdown in the home improvement sector appears to have persisted as expected, with sticky inflation and higher borrowing costs prompting customers to pause large-scale home remodels.
Here’s how the numbers stacked up:
Adjusted EPS: $4.68 vs. $4.71 (-0.64% miss)
Total revenues: $45.28 billion vs. $45.51 billion (-0.5% miss)
The bottom line increased 0.86% from the year-ago period while revenues jumped 4.9% from the second quarter of 2024. Home Depot stock was up roughly 3% in early trading Tuesday morning.
The results reflect a continued top-line recovery attributable to synergies from the SRS acquisition, expansion of its Pro ecosystem, strategic digital investments, and new store openings.
Comparable sales for the second quarter, a key indicator of the retailer’s health, increased 1.0%. Comparable sales in the U.S. increased 1.4%. Foreign exchange rates negatively impacted total company comparable sales during the quarter by approximately 40 basis points.
The results arrived amid a housing market sales slump that has been in place since 2022, when mortgage rates went on the ascent from pandemic-era lows. Sales of existing homes in the U.S. slid in June to the slowest pace in nearly a year.
For the second time this year, the leading home improvement retailer reaffirmed its guidance. Highlights include total sales growth in the current fiscal year of approximately 2.8%, comparable sales growth of 1.0%, gross margin of approximately 33.4%, and the opening of 13 new stores. Home Depot expects adjusted EPS to decline 2% on a full-year basis to $15.24.
Home Depot management has earned a reputation for operational excellence, but the company remains exposed to economy-wide issues beyond their control including elevated rates and soft residential remodeling activity. Despite these headwinds, CEO Ted Decker remained upbeat following the second-quarter results.
"Our results were in line with our expectations. The momentum that began in the back half of last year continued throughout the first half as customers engaged more broadly in smaller home improvement projects," Decker said.
Will Lowe’s Follow Home Depot’s Lead?
Lowe’s, which will be reporting its own quarterly results before the opening bell on Wednesday, is expected to post second-quarter earnings of $4.24 per share, a healthy 3.41% improvement relative to the same quarter in the prior year.
The company hasn’t missed the mark on its bottom line since 2019 and delivered a trailing four-quarter average earnings surprise of 3.22%. Estimates have remained steady over the past 60 days. Perhaps somewhat notably, our proven model does not conclusively predict an earnings beat for Lowe’s this time around.
Revenues are anticipated to climb 1.47% year-over-year to $23.93 billion. Lowe’s has surpassed revenue estimates in three of the past four quarters. Warmer weather in the second quarter likely translated into increased traffic, positively impacting sales and helping to reverse a decline in comp sales in the first quarter.
Lowe’s has now expanded its reach to larger professional customers through its acquisition of Artisan Design Group. The move expands Lowe’s reach in the design, distribution and installation space for new home construction and large-scale renovation projects. We expect total comparable sales growth of 1.5% for the second quarter.
Bottom Line
With today’s report from Home Depot, the company posted its second consecutive earnings miss. The sour result came after Home Depot’s miss in the first quarter when it broke a long string of earnings beats dating back to 2020.
Customer behavior clearly remains focused on smaller, maintenance-driven projects, primarily due to high interest rates discouraging large-scale remodeling.
Still, the ongoing aging housing stock and rising home equity levels continue to support a robust longer-term demand backdrop. Despite the lack of a large project rebound, Home Depot’s performance suggests that it is maintaining a strong foothold in core categories. The market is, at least initially, responding well to the retailer’s second-quarter release.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks Investment Ideas feature highlights: Home Depot and Lowe's
For Immediate Release
Chicago, IL – August 20, 2025 – Today, Zacks Investment Ideas feature highlights Home Depot (HD - Free Report) and Lowe’s (LOW - Free Report) .
Home Depot Reports 2nd Consecutive Earnings Miss
The second-quarter earnings season continues to wind down as more than 90% of S&P 500 companies have now reported results. Still, 15 S&P 500 members will report quarterly earnings this week, with the docket dominated by the retail sector.
Earnings out of home improvement retailers Home Depot and Lowe’s reflect notable reports, with the former kicking things off this morning with its second consecutive EPS miss. Both companies remain a Zacks Rank #3 (Hold) and are part of the Zacks Retail – Home Furnishings industry group.
This group currently ranks in the bottom 16% out of approximately 250 Zacks Ranked Industries and has lagged the general market by a wide margin year-to-date. Most stocks in this industry are relatively overvalued and expected to experience below-average earnings growth.
A primary reason for the underperformance is the broader operating environment, which remains a difficult one for these home improvement chains. Home Depot and Lowe’s face countless headwinds, perhaps most notably the elevated interest rate backdrop.
The home improvement sector has witnessed a sharp slowdown over the last few years as high mortgage rates and rising home prices stifled demand. Alongside the rate environment, weakness around discretionary spending is also a concern.
Despite the less-than-ideal setting, Home Depot appears to have executed quite well. On a positive note, upcoming rate cuts from the Federal Reserve are expected to reduce borrowing costs for homeowners looking to renovate their properties, benefiting these home improvement retailers.
Home Depot Misses Estimates as Big Projects Remain on Hold
Home Depot reported its second-quarter results on Tuesday morning before the opening bell, missing expectations on both the top and bottom lines. The slowdown in the home improvement sector appears to have persisted as expected, with sticky inflation and higher borrowing costs prompting customers to pause large-scale home remodels.
Here’s how the numbers stacked up:
Adjusted EPS: $4.68 vs. $4.71 (-0.64% miss)
Total revenues: $45.28 billion vs. $45.51 billion (-0.5% miss)
The bottom line increased 0.86% from the year-ago period while revenues jumped 4.9% from the second quarter of 2024. Home Depot stock was up roughly 3% in early trading Tuesday morning.
The results reflect a continued top-line recovery attributable to synergies from the SRS acquisition, expansion of its Pro ecosystem, strategic digital investments, and new store openings.
Comparable sales for the second quarter, a key indicator of the retailer’s health, increased 1.0%. Comparable sales in the U.S. increased 1.4%. Foreign exchange rates negatively impacted total company comparable sales during the quarter by approximately 40 basis points.
The results arrived amid a housing market sales slump that has been in place since 2022, when mortgage rates went on the ascent from pandemic-era lows. Sales of existing homes in the U.S. slid in June to the slowest pace in nearly a year.
For the second time this year, the leading home improvement retailer reaffirmed its guidance. Highlights include total sales growth in the current fiscal year of approximately 2.8%, comparable sales growth of 1.0%, gross margin of approximately 33.4%, and the opening of 13 new stores. Home Depot expects adjusted EPS to decline 2% on a full-year basis to $15.24.
Home Depot management has earned a reputation for operational excellence, but the company remains exposed to economy-wide issues beyond their control including elevated rates and soft residential remodeling activity. Despite these headwinds, CEO Ted Decker remained upbeat following the second-quarter results.
"Our results were in line with our expectations. The momentum that began in the back half of last year continued throughout the first half as customers engaged more broadly in smaller home improvement projects," Decker said.
Will Lowe’s Follow Home Depot’s Lead?
Lowe’s, which will be reporting its own quarterly results before the opening bell on Wednesday, is expected to post second-quarter earnings of $4.24 per share, a healthy 3.41% improvement relative to the same quarter in the prior year.
The company hasn’t missed the mark on its bottom line since 2019 and delivered a trailing four-quarter average earnings surprise of 3.22%. Estimates have remained steady over the past 60 days. Perhaps somewhat notably, our proven model does not conclusively predict an earnings beat for Lowe’s this time around.
Revenues are anticipated to climb 1.47% year-over-year to $23.93 billion. Lowe’s has surpassed revenue estimates in three of the past four quarters. Warmer weather in the second quarter likely translated into increased traffic, positively impacting sales and helping to reverse a decline in comp sales in the first quarter.
Lowe’s has now expanded its reach to larger professional customers through its acquisition of Artisan Design Group. The move expands Lowe’s reach in the design, distribution and installation space for new home construction and large-scale renovation projects. We expect total comparable sales growth of 1.5% for the second quarter.
Bottom Line
With today’s report from Home Depot, the company posted its second consecutive earnings miss. The sour result came after Home Depot’s miss in the first quarter when it broke a long string of earnings beats dating back to 2020.
Customer behavior clearly remains focused on smaller, maintenance-driven projects, primarily due to high interest rates discouraging large-scale remodeling.
Still, the ongoing aging housing stock and rising home equity levels continue to support a robust longer-term demand backdrop. Despite the lack of a large project rebound, Home Depot’s performance suggests that it is maintaining a strong foothold in core categories. The market is, at least initially, responding well to the retailer’s second-quarter release.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.