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HD | Earnings Preview

Fiscal Q2 2026 (May–Jul) has not printed. Home Depot reports Tuesday, August 18, 2026, before the open; the call is 9:00 a.m. ET. Last reported baseline is FY2026Q1 (May 19): net sales $41.77B (+4.8% YoY), total comps +0.6%, adj diluted EPS $3.43 (−3.7% YoY), adj operating margin 12.3% (−90 bps). Ticket +2.2% carried that print while transactions stayed negative at −1.3%. Management reaffirmed the December investor-day FY2026 band and has not touched it since.

Growth trajectory — stuck, not inflecting. Comps have been positive for four straight quarters, but the level is a 0–1% band, not a recovery. Ticket is doing the work; traffic has been negative in five of the last six printed quarters. Big-ticket (>$1,000) has been decelerating — +2.6% last Q2 → +0.8% in Q1. Last year’s Q2 was the high-water mark (comps +1.0%, US +1.4%, adj EPS $4.68). FMP’s $47.25B / +4.4% sales bar on that base is the high end of the FY sales envelope (+2.5% to +4.5%); implied core comps are only about flat to +1% if GMS / SRS / Mingledorff’s do the rest. EPS at +1.1% sits at the low end of the flat-to-+4% adj-EPS guide after a Q1 already −3.7% YoY. The year still needs a 2H step-up.

Watch items into Tuesday

• Guidance. HD does not guide the quarter. The live bar is the reaffirmed FY band: sales +2.5–4.5%, comps flat to +2%, GM ~33.1%, adj OM 12.8–13.0%, adj EPS flat to +4% vs FY2025 $14.69. Decker: the 2H comp step-up is “solely driven by a return to normal store activity,” not a demand recovery. A reaffirm is the base case; a cut would be the first since Q3 FY2025; a raise would need ticket and traffic, not just GMS.
• Tariffs / cost stack. McPhail’s bias since February is up (fuel, commodities, new tariffs). Tariff refunds are assumed as a “significant offset” but were “immaterial” received as of the Q1 call. Q1 GM was 33.0% (−75 bps YoY, “vast majority GMS mix”). Q2 pressure was pre-announced as continuing, “not quite” Q1’s degree. Another −75 bp-class print with core no longer “very stable” is the margin miss.
• Interim office. Ted Decker took a temporary medical leave on August 12. Ann-Marie Campbell runs day-to-day ops; Richard McPhail is interim PEO and already owns finance plus the July 30 Office of Pro Acceleration. Tone continuity on the FY range is itself a data point.

Peer tape into the print is split by customer: Pro / paint / MRO (SHW, FAST, FND Pro, SWK) are fine-to-strong; housing-turnover and specialty DIY (BLDR, TSCO, MAS) are not. Lowe’s prints the next morning — HD sets the sector tape.

HD issues no quarterly revenue, EPS, or margin range. The only forward numbers on the May 19 Q1 call were the reaffirmed FY2026 guide plus cadence / SRS color. Classify the FY framework as conservative on demand (no inflection, negative transactions assumed, 2H only on storm compares). Street Q2 is aggressive on sales and conservative on EPS.

Remaining-year math (not company guidance). Q1 sales $41.77B + FMP Q2 $47.25B = $89.02B in H1. Against the FY sales mid of $170.4B that leaves $81.4B for H2 vs H2 FY2025 $41.35B + $38.20B = $79.55B → H2 +2.4%. On EPS: Q1 adj $3.43 + FMP Q2 $4.73 = $8.16; FY adj mid $14.98 leaves $6.82 for H2 vs H2 FY2025 adj $3.74 + $2.72 = $6.46 → H2 EPS +5.6%. Q2 only has to stabilize; Q3/Q4 have to deliver.

Guidance credibility. Sales guide has been a floor once M&A is in (FY2024 beat; FY2025 in-line-to-beat revised). Comp guide has been ~70–80 bps optimistic two years running (FY2024 −1.8% vs ~−1%; FY2025 +0.3% vs ~+1%). They will cut rather than sandbag all year (Q3 FY2025: adj EPS −2% → −5%). Whisper into this print: FY comps ~flat to +0.5%; treat the +2% high as a stretch. Do not walk in expecting a free +2–4% EPS beat — L4 median Street surprise is −0.1%.

YoY only. HD is a retailer — drivers above the consolidated P&L are comps (ticket vs transactions), U.S. vs total, big-ticket, and the SRS/GMS wholesale layer. Internal estimates are n/a.

(a) Current quarter — FY2026Q2 (upcoming)

A +4.4% sales print on last year’s strongest quarter is GMS/SRS annualization plus a still-soft core. The Q2 tell: does ticket stay ≥+2% and do transactions stop getting worse, or does big-ticket keep fading from last Q2’s +2.6% toward Q1’s +0.8%?

(b) FQ+1 — FY2026Q3 (expected; HD will not issue a Q3 range)

Street’s Q3 EPS (+5.8% YoY) is harder than Q2’s +1.1% and is how the FY “flat to +4%” EPS guide gets back on track. If Q2 comps print closer to Q1’s +0.6% than to last Q2’s +1.0%, the $3.96 number is the first thing that breaks.

(c) FY+1 / standing FY2026 guide (no FY2027 company guide)

FMP FY2027 (year ending 2028-02-01; not company-guided): revenue $177.30B / EPS $16.07 — +3.7% / +7.6% vs FY2026 Street. Treat as Street-only.

Last-print baseline (FY2026Q1 vs FY2025Q1 — do not treat as this quarter)

Tone into the quarter

The live guide is annual FY2026, issued on the FY2025Q4 call (Feb 24) from the December 2025 investor conference and unchanged on May 19. Confidence is high on execution and share, explicitly not on a demand recovery.

McPhail, pressed on whether the Street should sit at the low end: “still very early” with “our largest selling weeks still ahead of us.” That is execution confidence, not macro confidence. An in-line Q2 that merely defends the annual range is the base case they telegraphed.

Assumptions still live

• No housing inflection. July existing-home sales 4.06M SAAR (NAR, −1.7% MoM / +0.7% YoY). 30-year mortgage ~6.67% the week of Aug 13 (Freddie Mac) — rates have risen ~20–25 bps since the Q1 call.
• Ticket ~+3% from lapped price, transactions stay negative. Q1 ticket +2.2% / transactions −1.3% tracks the script.
• 2H comps higher only on storm compares, not demand. NOAA’s Aug 6 outlook (7–13 named, 2–6 hurricanes, 0–2 major) is below normal — that raises the bar on the Q3/Q4 “normal storms” mechanism.
• GMS mix is the GM walk. ~40 bps full-year pro forma; 1H ~−50 bps, 2H ~flat.
• Tariff refunds as an untested offset. “Immaterial” cash received as of May 19.

Tone arc across four calls

Q2 FY2025 confident / slight-improvement assumed → Q3 FY2025 miss and cut (“expected increase in demand did not materialize”) → Q4 FY2025 / Q1 FY2026 no-inflection, hold-the-band. They lowered the demand bar after being wrong, then refused to move it after one in-line quarter. The contradiction to watch: they keep repeating Pro share + SRS organic mid-single-digits + “grow share in any environment” as the bull case, while Street’s Q2 EPS (+1.1%) says it does not believe that drops through.

Post-guidance updates (May 19 → Aug 17)

Daloopa has no 2026Q2 documents that revise the guide. No sell-side conference between prints.

What Tuesday has to do

1. Defend the annual range without introducing a demand-recovery story they have already disowned.
2. Show Q2 comps that do not force the Street to fade 2H. A company comp below ~+0.5% with a negative July would put the flat-to-+2% range on the low-end seat McPhail declined in May.
3. Prove Pro is more than mix. SRS organic, Mingledorff’s first full quarter, $400M cross-sell update.
4. Host without Decker. Any hedge, narrowing to the low end, or “until Ted is back” is a tone break.

Ranked by information value on August 18. Consensus on comps / Pro / SRS is not modelled — FMP has a sales and EPS number only.

Scorecard on the 18th

Material, non-earnings flow since the May 19 print. The window’s only thesis-level item is Decker’s leave, six days before the call. Everything else is on-strategy execution of the December investor-day pillars.

Pre-window overlay (not new flow): SRS closed Mingledorff’s on May 11 (42 HVAC locations, five SE states). Q2 is the first full quarter of the HVAC vertical inside SRS. FIFA World Cup sponsorship and military-delivery SKUs are brand, not P&L.

Notable absences: no guidance revision, no delayed release, no CFO departure, no new large M&A, no contested AGM, no leverage-target change. Lowe’s Q1 also printed +0.6% comps the day after HD and affirmed — neither banner has signaled a housing inflection.

HD is Mixed, not a consistent beater. Street EPS beat rate is 9/12 (75%) over the last 12 printed quarters and only 2/4 (50%) over the last 4. Revenue still hits more often (10/12, 3/4), but the size of the revenue surprise has compressed from ~+1.6% in the middle of the window to +0.2% over the last 4. FY2025 Q1–Q3 produced three consecutive Street EPS misses — the first clustered miss streak in the 12-quarter sample — before a +7.5% Q4 FY2025 EPS beat that management itself called “largely in line” with their plan. Beat magnitude is deteriorating once that calendar/tax/storm print is stripped out.

They are not a sandbagger. Q3 FY2025 is the tell: they missed their plan, said they missed, and cut. Guidance credibility is high; Street-beat credibility is fading. Variance language is always the same stack — weather / storms, then housing / big-ticket, then mix (SRS/GMS) — and “in line with our expectations” can coexist with a Street miss.

Bar into Tuesday. FMP $4.73 / $47.25B. L12-average “whisper” would be $4.80 / $47.8B; the honest recent bar is L4 median $4.72 / $47.3B. A print of ~$4.73 / ~$47.3B with comps around +0.5% to +1.0% and another “in line with our expectations” line is the base case versus their plan, not a disappointment.

Last-print reaction (FY2026Q1, BMO May 19 — not this quarter): Daloopa close May 18 $297.58 → May 19 $300.19 (+0.88%, reaction session) → May 20 $308.27 (+2.69% next session). Two-session +3.59%. The market did not fade the modest beat and 90 bp adj-margin compression in the first 48 hours.