The Home Depot: Modest Green Shoots on Share/Better Housing; Tariffs Noisy but FY27 Clean; Expecting Modest Stock Momentum to Continue

Research evidence excerpt

J P M O R G A N

North America Equity Research

18 August 2026

The Home Depot

Modest Green Shoots on Share/Better Housing; Tariffs

Noisy but FY27 Clean; Expecting Modest Stock

Momentum to Continue

Overweight

HD, HD US

Price (17 Aug 26):$337.88

Price Target (Dec-26):$396.00

PM’s Take: green shoots on share and better housing market exposure; tariffs

noisy but 2027 clean one way or the other. Overall, HD's better-than-expected

SSS of 1.7% total/1.3% US beat both Street and many buyside expectations, based

on our converstations, and essentially matched our above-consensus forecast. Exweather noise, trends were relatively consistent over the quarter, with HD comping

~1%+ in July against the hardest comparison of the year. Looking ahead, reasons

to believe that HD's sales growth could accelerate include (1) improving

housing markets on the east and west coasts (see FND's comments and home price

performance here vs. the south), which bode well for HD considering its

geographic footprint while its efforts to gain share with the Pro and DIY (see

today's fast delivery news) are also supportive; (2) HD will annualize against the

50-60 bp storm headwind with SRS an increasing contributor to comp in 2H (vs.

slightly negative in 1Q and positive in 2Q) portending a persistently widened total

comp gap vs. US stores. Indeed, the former includes the complex Pro effort, and

this would support a modicum of self-help and validate its strategy (see our CFO

highlights from April and January). On the tariff noise, while we differ with

mgmt that gross margin was "as expected" (HD implied gross margin ex

refunds down 30 bps in 2Q), the message of "we got it" is better said with FY27

op margins clean as HD would either price in persistent energy costs or find

efficiencies as an offset. Our updated 2027 EPS forecast of $16.54 remains ahead

of $16.08 per Consensus Metrix with our $396 Dec 2026 price target based on 24x

P/E. Near term, we could see continued upward movement in the stock as 2026

estimates are validated and the 2.9% comp in 2027 per Consensus Metrix becomes

possible (albeit likely not beatable without lower rates).

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