The Home Depot Inc. (NYSE:HD) reported fiscal second-quarter 2026 revenue and adjusted earnings that beat analyst estimates, helped by steady demand for smaller home improvement projects and higher average order values.
Home Depot stock initially traded higher following the earnings release but has since given up those gains and moved lower in Tuesday trading.
Sales rose 5.7% year over year to $47.861 billion, beating the $47.271 billion analyst estimate.
Adjusted diluted earnings increased 5.1% to $4.92 per share, beating the $4.73 estimate. GAAP diluted earnings rose 4.6% to $4.79 per share, while net earnings increased 4.7% to $4.766 billion.
Comparable Sales And Customer Trends
Comparable sales increased 1.7%, including a 1.3% increase in the U.S.
Comparable customer transactions fell 1%, while the comparable average ticket increased 2.8%. Total customer transactions declined 0.8% to 443.2 million, while the average ticket was $92.50.
“Our second quarter results exceeded our expectations. We saw broad based demand across the business as customers continued to engage in smaller projects,” Chief Financial Officer Richard McPhail said.
Senior Executive Vice President Ann-Marie Campbell credited the quarter’s performance to Home Depot’s business investments, customer service and strong execution despite a dynamic operating environment.
Operating Margins
Operating income increased 4.3% to $6.839 billion. GAAP operating margin narrowed to 14.3% from 14.5% a year earlier.
Adjusted operating income rose 4.8% to $7.017 billion, while adjusted operating margin slipped to 14.7% from 14.8%.
The non-GAAP measures exclude amortization of acquired intangible assets. Adjusted earnings also exclude related tax effects.
Cash Flow And Balance Sheet
Operating cash flow for the first six months increased to $11.422 billion from $8.968 billion a year earlier. Capital expenditures totaled $1.724 billion.
Home Depot ended the period with $2.085 billion in cash. The company reported $4.248 billion in short-term debt, $4.697 billion in current installments of long-term debt and $43.951 billion in long-term debt, excluding current installments.
Tariff Refunds Cut Cost Of Goods Sold By $685 Million
Home Depot received $730 million in tariff refunds during the second quarter, an executive said Tuesday during the company’s earnings call.
The refunds were tied to tariffs imposed under the International Emergency Economic Powers Act, or IEEPA.
The executive said the IEEPA tariff refunds reduced Home Depot’s cost of goods sold by $685 million during the quarter.
Fiscal 2026 Guidance
Home Depot reaffirmed its fiscal 2026 outlook for total sales growth of about 2.5% to 4.5% and comparable sales growth ranging from approximately flat to 2%. The company also expects to open about 15 new stores.
Home Depot expects GAAP earnings of $14.23 to $14.80 per share, compared with the $14.48 analyst estimate.
Adjusted earnings guidance of $14.69 to $15.28 per share brackets the $14.96 estimate. Sales guidance of $168.8 billion to $172.093 billion brackets the $170.958 billion estimate.
The company continues to expect an adjusted operating margin of about 12.8% to 13%. The outlook excludes an estimated 40-basis-point impact from acquired intangible asset amortization.
Adjusted earnings guidance also excludes an expected after-tax impact of about 50 cents per share.
Home Depot said its fiscal 2026 guidance includes expected IEEPA tariff refunds that should partially offset unplanned fuel, energy and other product input costs.
Home Depot Rolls Out Express Delivery Nationwide
Separately, Home Depot announced the nationwide rollout of Express Delivery.
The service offers professional and do-it-yourself customers delivery in three hours or less for a small flat fee. It does not require a subscription or membership.
HD Price Action: Home Depot shares were trading down 0.40% at $336.53 at the time of publication on Tuesday, according to Benzinga Pro data.
Photo by damann via Shutterstock
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