The Home Depot, Inc. (NYSE:HD) reported a stronger-than-expected fiscal second quarter, although the results did not establish a broad home-improvement recovery. Sales increased 5.7% to $47.86 billion, above the $47.27 billion consensus estimate. Company-defined non-GAAP adjusted diluted EPS rose to $4.92 from $4.68 and exceeded the $4.73 estimate. That measure excludes acquired intangible-asset amortization but includes the quarter’s tariff-refund benefit. Shares closed 0.1% lower at $337.49 on Tuesday following the report.
Comparable sales increased 1.7%, while U.S. comparable sales rose 1.3%. Comparable transactions declined 1%, while comparable average ticket increased 2.8%. The transaction and ticket metrics exclude SRS Distribution and HD Supply. The central question is whether Pro-led share gains can produce durable growth before housing turnover recovers.
BULL CASE: PRO INVESTMENTS ARE PRODUCING RESULTS
Professional-customer comparable sales at The Home Depot, Inc. (NYSE:HD) were positive and outperformed do-it-yourself demand. Strength appeared in Pro-heavy categories including decking, dimensional lumber, concrete, pipe and fittings, fasteners, and portable power.
Big-ticket comparable transactions above $1,000 increased 2.4%, although The Home Depot, Inc. (NYSE:HD) did not identify that metric as Pro-specific.
The SRS Distribution and GMS acquisitions are extending The Home Depot, Inc. (NYSE:HD) into specialty distribution, complex project sales, and job-site delivery. SRS performed above the company average, while 90% of retail stores completed an SRS sale through QuoteCenter during the past year. Online comparable sales increased 11%, and 13 of 16 merchandising departments produced positive comparable sales.
The Home Depot, Inc. (NYSE:HD) reaffirmed fiscal 2026 guidance for total sales growth of 2.5% to 4.5% and comparable-sales growth between flat and 2%.
BEAR CASE: THE REFUND MATERIALLY BENEFITED EARNINGS
The Home Depot, Inc. (NYSE:HD) received $730 million of IEEPA tariff refunds. Of that amount, $685 million reduced second-quarter cost of goods sold, while $45 million remained in inventory and is expected to flow through cost of goods sold as the related inventory is sold.
Management said the recognized refund added approximately 145 basis points to gross margin. Roughly 60 basis points of unplanned fuel, energy, and other input costs reduced the net refund benefit to approximately 85 basis points. Another 60-basis-point drag from acquisition mix left reported gross-margin improvement at about 25 basis points, bringing the margin to 33.7%.
Using the 24.5% second-quarter tax rate and 996 million diluted shares, the $685 million benefit equals approximately $0.52 per diluted share after tax. That is an illustrative calculation, not company-reported adjusted EPS, but it shows that the refund materially benefited reported adjusted EPS.
GAAP operating margin declined to 14.3% from 14.5%. Company-defined non-GAAP adjusted operating margin, which excludes acquired intangible-asset amortization but includes the tariff refund, slipped to 14.7% from 14.8%. Management expects unplanned costs to offset the refund’s annual benefit and maintained its outlook for company-defined non-GAAP adjusted diluted EPS growth between flat and 4% from fiscal 2025’s $14.69.
Comparable transactions remain a source of weakness. Smaller projects and Pro purchases supported sales, but large discretionary renovations remain pressured by high borrowing costs and limited housing turnover. Acquisitions can lift reported revenue without proving the underlying cycle has turned.
INSIDER MONKEY’S HEDGE FUND DATA
The filings available so far reflect positions held before The Home Depot, Inc. (NYSE:HD) released its fiscal second-quarter results. Insider Monkey’s database showed 100 hedge funds holding The Home Depot, Inc. (NYSE:HD) at the end of March 2026, down from 98 funds three months earlier.
CONCLUSION
The Home Depot, Inc. (NYSE:HD) delivered better comparable sales, Pro outperformance, and broad category strength. However, weaker comparable transactions, lower operating margins, and the substantial refund contribution make this an execution and market-share story rather than a housing recovery. A stronger inflection would combine positive comparable-transaction growth with margin resilience after the refund benefit passes.
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Disclosure: None. This article is originally published at Insider Monkey.
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