The Home Depot, Inc. (HD Quick QuoteHD - Free Report) is set to report first-quarter fiscal 2026 results on May 19, before market open. The company’s top line is expected to have increased year over year in the to-be-reported quarter. The Zacks Consensus Estimate for fiscal first-quarter revenues is pegged at $41.5 billion, indicating growth of 4.2% from the year-ago quarter.

The Zacks Consensus Estimate for quarterly earnings per share (EPS) of $3.42 indicates a decline of 3.9% from the year-ago period’s reported figure. The consensus estimate for EPS has been unchanged in the past 30 days.

The Home Depot, Inc. Price, Consensus and EPS Surprise

The Home Depot, Inc. price-consensus-eps-surprise-chart | The Home Depot, Inc. Quote

The Atlanta, GA-based leading home improvement retailer delivered a trailing four-quarter average earnings surprise of 1.16%. In the last reported quarter, the company delivered a positive earnings surprise of 7.9%.

HD’s Q1 Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Home Depot this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Home Depot has an Earnings ESP of -0.34% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Trends to Monitor Before HD’s Q1 Earnings

Home Depot’s first-quarter fiscal 2026 results are likely to reflect modest sales growth and stable customer engagement trends, supported by continued momentum in Pro demand, digital capabilities and market-share gains. Management highlighted on the last earnings call that underlying demand remained relatively stable despite ongoing pressure on the broader housing market. First-quarter fiscal 2026 results are also expected to benefit from contributions from the GMS acquisition and expansion of the SRS business, which continue to support the company’s Pro ecosystem and market-share growth initiatives.

Home Depot continues to invest heavily in its “One Home Depot” strategy, focusing on interconnected retail, supply-chain enhancements and improving the Pro ecosystem. The company noted that Pro customers utilizing its expanding ecosystem of delivery, project management and trade-credit tools are spending more across categories. Management also highlighted strong traction from AI-enabled project management tools, delivery tracking systems and order management enhancements, which are helping improve customer engagement and conversion rates.

Home Depot is also likely to benefit in first-quarter fiscal 2026 from strong demand in repair-and-maintenance categories, particularly following severe winter weather conditions across several regions in the United States. Management indicated that categories tied to storm recovery and weather-related repairs, including roofing, plumbing, electrical and outdoor maintenance, could see improved demand trends. The company also expects its spring selling season lineup, supported by innovative products and promotional events, to drive customer traffic and support comparable sales growth during the quarter.

However, Home Depot continues to face meaningful macroeconomic pressures that are likely to weigh on first-quarter fiscal 2026 earnings. Management acknowledged that elevated mortgage rates, low housing turnover and affordability challenges continue to suppress large discretionary home-improvement projects. The company specifically stated that it has “not yet seen a catalyst for an inflection in housing activity,” suggesting that demand for big-ticket remodeling categories remains subdued.

Another negative factor for the quarter is expected margin pressure related to the GMS acquisition and ongoing pricing investments within SRS. Management guided for first-half gross margins to decline about 50 basis points year over year due to acquisition annualization effects. Additionally, SRS faced aggressive industry pricing conditions after weak roofing demand and lower storm activity, leading the company to invest in pricing to preserve market share. Home Depot indicated that some of this pricing pressure will continue into the first quarter.

The company also warned that first-quarter fiscal 2026 earnings-per-share performance is expected to be down mid-single digits year over year because of acquisition-related costs, expense timing and margin headwinds. Management further emphasized that ongoing consumer uncertainty around inflation, employment conditions and financing costs continues to impact spending behavior, particularly for larger discretionary projects. HD noted that customers remain focused more on repair-and-maintenance activity rather than undertaking major renovation projects, which could continue to limit upside in the near term.

Our model predicts a gross margin of 32.9% for the fiscal first quarter, contracting 90 bps year over year. We expect adjusted operating income to decline 4% in the fiscal first quarter, with a 100-bps decline in the operating margin to 12.2%.

HD’s Price Performance & Valuation

Home Depot’s shares have lost 22.6% in the past three months compared with the industry’s 21.1% decline. However, the stock has lagged the S&P 500 and the Retail-Wholesale sector’s growth of 9.1% and 5.6%, respectively, in the same period.

HD’s 3-Month Stock Performance

Image Source: Zacks Investment Research

Home Depot’s stock has outperformed its arch-rival Lowe’s Companies Inc. (LOW Quick QuoteLOW - Free Report) and Floor & Decor (FND Quick QuoteFND - Free Report) , which fell 23.3% and 35% in the past three months. Meanwhile, HD has underperformed FGI Industries (FGI Quick QuoteFGI - Free Report) , which has risen 6.6% in the same period.

Home Depot’s current valuation appears quite pricey. The company trades at a forward 12-month P/E multiple of 19.65X, exceeding the industry average of 18.78X and below the S&P 500’s average of 22.07X.

HD Stock's P/E Valuation

Image Source: Zacks Investment Research

 
Given the premium valuation, investors may face significant risks if the company's future performance does not meet expectations. The retail market is becoming increasingly competitive, and Home Depot’s initiatives may not suffice to drive significant growth. Macroeconomic challenges and heightened competition can impede the company's ability to sustain its current growth trajectory.

Investment Thesis on HD Stock

Home Depot continues to strengthen its position as the leading home-improvement retailer through strategic investments in its interconnected retail ecosystem, digital capabilities and Pro-focused initiatives. The company’s “One Home Depot” strategy remains a key growth driver, helping improve customer engagement, delivery reliability and omnichannel execution. Continued investments in AI-enabled project management tools, order-management systems and supply-chain enhancements are supporting higher Pro customer engagement and improving operational efficiency.

The company is also benefiting from the expansion of its Pro ecosystem through the GMS acquisition and growth in the SRS business. Home Depot continues to gain traction among professional contractors by enhancing delivery capabilities, trade-credit offerings and project-management tools. Strength in repair-and-maintenance categories, healthy online sales momentum and demand tied to severe winter weather conditions are expected to support first-quarter fiscal 2026 sales trends and help the company continue gaining market share despite a challenging housing backdrop.

At the same time, Home Depot faces near-term macroeconomic challenges, including elevated mortgage rates, weak housing turnover and subdued demand for large discretionary remodeling projects. Consumer uncertainty surrounding inflation, financing costs and employment conditions continues to pressure big-ticket categories. Margin pressures related to acquisition integration costs, pricing investments within SRS and higher operating expenses are also likely to weigh on profitability in the near term.

Conclusion

As Home Depot approaches its first-quarter fiscal 2026 earnings release, investors remain focused on whether the company can sustain stable sales growth and market-share gains despite ongoing housing-market weakness. The company continues to benefit from resilient repair-and-maintenance demand, strong Pro engagement and steady progress in digital and interconnected retail initiatives. Expansion of the Pro ecosystem through GMS and SRS, combined with technology-driven operational improvements, provides additional support to the company’s long-term growth strategy.

However, near-term risks remain meaningful. Persistent pressure on large discretionary home-improvement projects, acquisition-related margin dilution and cautious consumer spending trends could continue to weigh on earnings growth. While Home Depot’s premium valuation leaves limited room for disappointment, the company’s scale, operational discipline and strategic investments position it well to navigate the challenging environment and capitalize on a recovery in housing and remodeling demand over the longer term.