Quick Take: Home Depot 2Q26 - Comp beat supports upside to FY26 guide; tariff refunds help

Research evidence excerpt

18 August 2026

Zhihan Ma, CFA

US Retailing Broadlines & Hardlines

Home Depot Inc

Jeremy Miles, CFA

Rating

Market-Perform

Price Target

HD

344.00 USD

Quick Take: Home Depot 2Q26 - Comp beat supports upside to

FY26 guide; tariff refunds help

Home Depot delivered a comp beat in Q2 while the bottom line beat was likely aided

by tariff refunds. Comp sales grew by 1.7% (vs. cons. at 0.9%), led by ticket growth of

2.8%, partly offset by traffic decline of -1.0%. FX contributed 40bps to total company comp.

Despite GMS’ margin dilutive impact of ~40bps, adj. EBIT margin of 14.7% only declined by

-10bps YoY and came in 30bps above consensus, thanks to the better comp and likely tariff

refunds. Adj. EPS of $4.92 was a 19c beat.

From here, as HD laps tariff-driven price increases, investors will need to see an improvement

in the traffic trend, which has been negative for six consecutive quarters. Meanwhile, we will

be focused on understanding the one-time tariff refund benefit in Q2 and how HD plans to

reinvest the proceeds, if at all.

HD reiterated its FY26 guidance, including tariff refunds, which are partly offset

by fuel and other cost inflation. The company expects 0%- 2% comp sales growth

(unchanged, vs. cons. of 1.2%), net sales growth of 2.5%-4.5%, including the GMS

acquisition (unchanged, vs. cons. of 3.8%), gross margin of ~33.1% (unchanged, vs. cons.

of 33.1%), adj. EBIT margin of 12.8%-13.0% (unchanged, vs. cons. of 12.8%), and adj. EPS

to grow by 0%-4% (unchanged, vs. cons. of 2.8%). Given the Q2 beat, the guidance implies

undemanding assumptions for H2 top line growth, with room to beat especially if hurricane

activities in the fall provide a seasonal boost to comp.

Overall, we maintain our cautious outlook and expect a gradual path to a home

improvement market rebound. With the Middle East conflict, mortgage rates and inflation

have remained elevated, which doesn’t help address the affordability hurdle for homeowners

to engage with big ticket discretionary projects. However, as expectations for a rebound are

low, one could argue that the downside is limited and the stock could rebound on the back of

better macro news.

Close Date

17 Aug 2026

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