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Home Depot's Q1 Earnings Beat Estimates, Comparable Sales Up 0.6%
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Key Takeaways
HD posted Q1 sales of $41.77B and adjusted EPS of $3.43, topping consensus estimates.
Home Depot reported 0.6% comps growth, with U.S. comps up 0.4% in the quarter.
HD reaffirmed fiscal 2026 outlook, expecting sales growth of 2.5-4.5% and 15 new stores.
The Home Depot, Inc. (HD - Free Report) delivered first-quarter fiscal 2026 results that topped the Zacks Consensus Estimate on both the top and bottom lines. Adjusted earnings were $3.43 per share, down 3.7% from the year-ago quarter but came above the consensus mark of $3.40.
Net sales rose 4.8% year over year to $41.77 billion and beat the consensus estimate of $41.49 billion. Customer transactions totaled 391.1 million, down 0.9% year over year, while average ticket increased 2.3% to $92.76. The underlying business demand has been relatively similar to the trends seen throughout fiscal 2025, amid consumer uncertainty and housing affordability pressure.
Comparable sales (comps) increased 0.6% in the quarter, with U.S. comps up 0.4%. Foreign exchange rates provided an additional lift, contributing roughly 55 basis points (bps) to comps. Our model predicted consolidated comps growth of 1% for the fiscal first quarter.
This Zacks Rank #3 (Hold) company’s shares have lost 10.9% in the past six months compared with the industry’s 9.9% decline.
The Home Depot, Inc. Price, Consensus and EPS Surprise
Gross profit increased 2.4% to $13.78 billion, supported by the higher sales. However, the cost of sales rose faster than revenues, which kept the gross margin under pressure compared with the prior-year period. The gross margin was 33%, down 80 bps year over year. Our model predicted a 90-bps year-over-year decline in the gross margin to 32.9% for the fiscal first quarter.
Selling, general and administrative (SG&A) expenses of $7.77 billion increased 5.7% from $7.96 billion in the year-ago quarter. As a percentage of sales, SG&A was 19.1%, up roughly 20 bps year over year.
Adjusted operating income was $5.15 billion, down 2.3% year over year, while the operating margin of 12.3% contracted 90 bps year over year.
Our model predicted the SG&A expense rate to increase 20 bps year over year to 19.1%. We anticipated the adjusted operating income to drop 4% year over year and the operating margin to contract 100 bps to 12.2% for the fiscal first quarter.
HD’s Other Financial Updates
Home Depot ended first-quarter fiscal 2026 with cash and cash equivalents of $1.60 billion, long-term debt (excluding current installments) of $44.8 billion and stockholders’ equity of $13.9 billion. In first-quarter fiscal 2026, the company generated $6.03 billion of net cash from operating activities.
Merchandise inventories were $27.28 billion and net receivables were $6.62 billion at quarter-end. The company reinvested $844 million in capital expenditures during the quarter and spent $286 million, net, on businesses acquired.
Home Depot returned cash to shareholders through dividends, paying $2.32 billion in the period.
Home Depot Reaffirms Fiscal 2026 Outlook
Management reaffirmed its fiscal 2026 framework, calling for total sales growth of approximately 2.5-4.5% and comparable sales growth of roughly flat to 2%. The company also expects to open about 15 stores this year.
For fiscal 2026, Home Depot continues to project gross margin around 33.1% and operating margin of approximately 12.4-12.6%, with adjusted operating margin expected in the 12.8-13.0% range. It expects capital expenditures of roughly 2.5% of total sales. The company anticipates an effective tax rate of about 24.3%, net interest expense of roughly $2.3 billion, and earnings per share growth of approximately flat to 4.0% from $14.23 in fiscal 2025.
LEVI delivered a trailing four-quarter earnings surprise of 9.8%, on average. The Zacks Consensus Estimate for Levi Strauss’ current financial-year sales indicates growth of 10.3% from the year-ago number.
Kohl's Corporation (KSS - Free Report) , which is a department store chain, currently carries a Zacks Rank of 2.
KSS delivered a trailing four-quarter earnings surprise of 72.3%, on average. The Zacks Consensus Estimate for KSS’ current financial-year sales indicates a drop of 1% from the year-ago number.
American Eagle Outfitters (AEO - Free Report) , which is a retailer of casual apparel, accessories and footwear, currently carries a Zacks Rank of 2.
The Zacks Consensus Estimate for AEO’s current financial-year sales is expected to rise 5.1% from the corresponding year-ago reported figure. AEO delivered a trailing four-quarter earnings surprise of 37.6%, on average.
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Home Depot's Q1 Earnings Beat Estimates, Comparable Sales Up 0.6%
Key Takeaways
The Home Depot, Inc. (HD - Free Report) delivered first-quarter fiscal 2026 results that topped the Zacks Consensus Estimate on both the top and bottom lines. Adjusted earnings were $3.43 per share, down 3.7% from the year-ago quarter but came above the consensus mark of $3.40.
Net sales rose 4.8% year over year to $41.77 billion and beat the consensus estimate of $41.49 billion. Customer transactions totaled 391.1 million, down 0.9% year over year, while average ticket increased 2.3% to $92.76. The underlying business demand has been relatively similar to the trends seen throughout fiscal 2025, amid consumer uncertainty and housing affordability pressure.
Comparable sales (comps) increased 0.6% in the quarter, with U.S. comps up 0.4%. Foreign exchange rates provided an additional lift, contributing roughly 55 basis points (bps) to comps. Our model predicted consolidated comps growth of 1% for the fiscal first quarter.
This Zacks Rank #3 (Hold) company’s shares have lost 10.9% in the past six months compared with the industry’s 9.9% decline.
The Home Depot, Inc. Price, Consensus and EPS Surprise
The Home Depot, Inc. price-consensus-eps-surprise-chart | The Home Depot, Inc. Quote
Home Depot’s Costs & Margin Details
Gross profit increased 2.4% to $13.78 billion, supported by the higher sales. However, the cost of sales rose faster than revenues, which kept the gross margin under pressure compared with the prior-year period. The gross margin was 33%, down 80 bps year over year. Our model predicted a 90-bps year-over-year decline in the gross margin to 32.9% for the fiscal first quarter.
Selling, general and administrative (SG&A) expenses of $7.77 billion increased 5.7% from $7.96 billion in the year-ago quarter. As a percentage of sales, SG&A was 19.1%, up roughly 20 bps year over year.
Adjusted operating income was $5.15 billion, down 2.3% year over year, while the operating margin of 12.3% contracted 90 bps year over year.
Our model predicted the SG&A expense rate to increase 20 bps year over year to 19.1%. We anticipated the adjusted operating income to drop 4% year over year and the operating margin to contract 100 bps to 12.2% for the fiscal first quarter.
HD’s Other Financial Updates
Home Depot ended first-quarter fiscal 2026 with cash and cash equivalents of $1.60 billion, long-term debt (excluding current installments) of $44.8 billion and stockholders’ equity of $13.9 billion. In first-quarter fiscal 2026, the company generated $6.03 billion of net cash from operating activities.
Merchandise inventories were $27.28 billion and net receivables were $6.62 billion at quarter-end. The company reinvested $844 million in capital expenditures during the quarter and spent $286 million, net, on businesses acquired.
Home Depot returned cash to shareholders through dividends, paying $2.32 billion in the period.
Home Depot Reaffirms Fiscal 2026 Outlook
Management reaffirmed its fiscal 2026 framework, calling for total sales growth of approximately 2.5-4.5% and comparable sales growth of roughly flat to 2%. The company also expects to open about 15 stores this year.
For fiscal 2026, Home Depot continues to project gross margin around 33.1% and operating margin of approximately 12.4-12.6%, with adjusted operating margin expected in the 12.8-13.0% range. It expects capital expenditures of roughly 2.5% of total sales. The company anticipates an effective tax rate of about 24.3%, net interest expense of roughly $2.3 billion, and earnings per share growth of approximately flat to 4.0% from $14.23 in fiscal 2025.
Key Picks in the Retail Space
Levi Strauss & Co. (LEVI - Free Report) , which is a designer and marketer of jeans, casual wear and related accessories, currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
LEVI delivered a trailing four-quarter earnings surprise of 9.8%, on average. The Zacks Consensus Estimate for Levi Strauss’ current financial-year sales indicates growth of 10.3% from the year-ago number.
Kohl's Corporation (KSS - Free Report) , which is a department store chain, currently carries a Zacks Rank of 2.
KSS delivered a trailing four-quarter earnings surprise of 72.3%, on average. The Zacks Consensus Estimate for KSS’ current financial-year sales indicates a drop of 1% from the year-ago number.
American Eagle Outfitters (AEO - Free Report) , which is a retailer of casual apparel, accessories and footwear, currently carries a Zacks Rank of 2.
The Zacks Consensus Estimate for AEO’s current financial-year sales is expected to rise 5.1% from the corresponding year-ago reported figure. AEO delivered a trailing four-quarter earnings surprise of 37.6%, on average.