Home Depot revenue rises 4.8% as Q1 comps signal stabilization

Home Depot reported Q1 revenue of $41.8 billion, up 4.8% from a year earlier, as comparable sales turned positive.

"The underlying demand in our business was relatively similar to what we saw throughout fiscal 2025, despite greater consumer uncertainty and housing affordability pressure," Chief Executive Officer Ted Decker said.

Adjusted earnings per share fell 3.7% to $3.43, in line with company expectations. Comparable sales rose 0.6%, driven by strength in the Pro segment, which outperformed DIY customers. Nine of 16 merchandising departments posted positive comps, including power, plumbing, paint and electrical. Big-ticket transactions above $1,000 increased 0.8%, though larger discretionary projects remained pressured by elevated interest rates.

Shares trade at $326.01, down 7% over the past year and 11% below the 52-week high of $418.06. The company reaffirmed its fiscal 2026 guidance for comparable sales growth of flat to 2% and earnings growth of flat to 4%, a sign that management expects no significant improvement in underlying demand this year.

Online sales grew more than 10% year over year, marking the fourth consecutive quarter of double-digit digital growth. The company is expanding its Pro ecosystem through acquisitions such as Mingledorff's and leveraging SRS Distribution to deepen its presence in specialty trade categories including roofing, HVAC and building materials. These initiatives target a larger share of the $700 billion Pro market.

Peer Lowe's reported similar trends, with Q1 sales rising 10.3% to $23.1 billion and comparable sales up 0.6%. Adjusted EPS grew 3.8% to $3.03. Lowe's also maintained its full-year guidance for sales of $92 billion to $94 billion.

Home Depot's operating margin compressed to 11.9% from 12.9% in the prior year, as SRS Distribution amortization weighed on profitability. The company has paid 156 consecutive dividends and maintains a return on equity of 128.4%, a reflection of its long-term earnings power despite the cyclical downturn.

Wall Street's consensus price target stands at $370.18, with 22 of 36 analysts rating the stock a Buy and 14 at Hold. No analysts recommend selling. The stock trades at 20 times forward earnings, below its historical average, reflecting the housing cycle pessimism baked into the current valuation.

The return to positive comparable sales and sustained Pro momentum suggest Home Depot may be nearing a trough in the housing cycle. Investors will watch mortgage rate trends and the pace of existing home turnover for signs of a broader recovery that could lift big-ticket demand.

This article is for informational purposes only and does not constitute investment advice.