Home Depot Q1 Performance Exceeds Expectations, Full-Year Guidance Remains Unchanged

Facing declining consumer confidence and a persistently sluggish real estate market, Home Depot submitted a mixed report card on Tuesday—revenue and adjusted profits both exceeded Wall Street expectations, but same-store sales, a core health indicator, only rose by 0.6%, lower than analyst estimates, and the real estate market recovery's suppression on large-scale home projects continues.

After the financial report was announced, the company's stock slightly rose by 0.4% before the market opened. As of Monday's closing, the stock has accumulated a 13% decrease this year, while the S&P 500 Index increased by 8.1% during the same period.

To be specific, Home Depot's first-quarter revenue reached $41.77 billion, a year-over-year increase of about 5%, exceeding the market's expectation of $41.52 billion; adjusted earnings per share were $3.43, also slightly higher than the expected $3.41. However, looking at the net profit口径, quarterly net profit fell from $3.43 billion to $3.29 billion, diluted earnings per share decreased from $3.45 to $3.30, a reduction of about 4.2%.

Same-store sales increased by 0.6%, with a 0.4% increase in the United States; customer transaction volume decreased by 1.3%, but the average transaction value rose by 2.3% to $92.76.

CEO Ted Decker characterized this performance as a demonstration of resilience in his statement, stating that despite the rising uncertainty among consumers and ongoing pressure from housing affordability, the company's underlying demand is consistent with the trends observed throughout the fiscal year 2025.

Homeowners Clamp Down on Wallets, Major Projects Keep Getting Pushed Back

CFO Richard McPhail provided a more detailed description of the demand structure. He noted that homeowners, compared to other consumer groups, have a stronger financial cushion that allows demand to be maintained; but even within this group, consumer behavior has clearly changed. "They continue to tell us that they will delay spending on major projects, which is consistent with what we have observed over the past few years."

This cautious sentiment is directly reflected in the category structure: paint, gardening supplies, patio grills, and storage items are popular with general consumers, while professional clients purchase more power tools, water heaters, paint, and other relatively small-scale or immediate materials.

High loan interest rates and high housing prices have continued to suppress house buying and overall renovation activities that require large-scale financing for three consecutive years. After a brief dip in February, mortgage interest rates have climbed again along with energy prices and geopolitical tensions, casting a shadow over the originally important spring housing market.

Betting on Professional Customers, Seeking Structural Growth

While waiting for the real estate market to warm up, Home Depot has chosen to take the initiative. Professional clients (contractors, roofers, and other industry practitioners) currently contribute about half of the company's revenue and have been the core direction of M&A layout in recent years. After acquiring SRS Distribution in 2024, Home Depot entered the professional service markets of roofing, landscaping, and swimming pools; the subsequent acquisition of GMS further extended into the field of specialty building materials. Last week, SRS made another move by completing the acquisition of Mingledorff's, a wholesaler of HVAC equipment, entering the HVAC track with a total addressable market size of about $100 billion.

McPhail characterized these moves as strategic positioning: "Everything we do, including the acquisitions of the past few years, is to help us gain more share in the $700 billion professional market. We have the qualifications to win in this market, but we do not yet have the full capability to win it." As of the end of the first quarter, Home Depot operates 2361 retail stores worldwide and over 1280 SRS outlets, with a total employee count of more than 470,000.

Full-Year Guidance Remains Unchanged, Tariff Refunds Difficult to Speak of Substantial Benefits

Despite same-store sales falling short of expectations, Home Depot reaffirmed its full-year guidance for fiscal 2026, expecting a total sales increase of 2.5% to 4.5%, comparable sales growth of about 0% to 2%, and adjusted diluted earnings per share to increase by 0% to 4% over the $14.69 of fiscal 2025. The management has repeatedly stated that for a significant rebound in the housing market, a more substantial decrease in mortgage interest rates and a substantial increase in resident income levels are