HD · Q4 2025 Earnings

Cautious

Home Depot (The)

Reported February 24, 2026

30-second summary

30-second take: Q4 revenue fell 3.8% to $38.2B on the lap of last year's extra week, with comparable sales scraping +0.4% (U.S. +0.3%) and Q4 adjusted operating margin landing at 10.5% — confirming the H2 deleverage the prior brief flagged. November and December U.S. comps were actually slightly negative (-0.3% and -0.2%); a January storm-aided +1.4% U.S. print is what dragged the quarter over the line. The headline is the FY2026 guide: management raised total sales growth to 2.5–4.5% (prior 3.0%), comp sales to flat–2.0% (prior "slightly positive"), and adjusted EPS to flat–+4% off a $14.69 base (prior -5% off $15.24). The EPS line looks like a 9-point swing, but the base year was reset down 3.6%; the absolute FY2026 adjusted EPS midpoint of ~$14.94 sits ~2% below the $15.24 starting point management defended a year ago. Margin guide cut again: adjusted operating margin range 12.8–13.0% (prior 13.0% point) and gross margin 33.1% (prior 33.2%).

Headline numbers

EPS

Q4 FY2025

$2.72

Revenue

Q4 FY2025

$38.20B

-3.8% YoY

Gross margin

Q4 FY2025

32.6%

Operating margin

Q4 FY2025

10.1%

Key financials

Q4 FY2025

Metric	Q4 FY2025	YoY	Q3 FY2025	QoQ
Revenue	$38.20B	-3.8%	$41.35B	-7.6%
EPS	$2.72	—	$3.74	-27.3%
Gross margin	32.6%	—	33.4%	-80bps
Operating margin	10.1%	—	12.9%	-280bps

Guidance

Company raised FY2026 revenue growth and adjusted EPS growth guidance despite housing headwinds, signaling operational resilience and market share gains, though absolute margins compress slightly.

Guidance is issued for both next quarter and the full year. Both may appear below.

New guidance

Metric	Period	Guide	YoY
SRS Organic Sales Growth	FY2026	mid-single digits	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Revenue	FY2026	approximately 3.0% growth	$168.7B to $175.1B (2.5% to 4.5% growth)	+0.0-1.5pts; absolute range now explicit vs prior point estimate	Raised
Comparable Sales Growth	FY2026	slightly positive	approximately flat to 2.0%	from qualitative 'slightly positive' to explicit 0-2.0% range	Raised
Adjusted Diluted EPS Growth	FY2026	decline approximately 5.0% from $15.24 in FY2024	approximately flat to 4.0% growth from $14.69 in FY2025	+9.0pts swing (from -5.0% decline to flat-to-+4.0% growth)	Raised
Gross Margin	FY2026	approximately 33.2%	approximately 33.1%	-0.1pts	Lowered
Operating Margin	FY2026	approximately 12.6%	approximately 12.4% to 12.6%	widened to range; low end -0.2pts vs prior point	Lowered
Adjusted Operating Margin	FY2026	approximately 13.0%	approximately 12.8% to 13.0%	-0.2pts at low end	Lowered
New Store Openings	FY2026	approximately 12	approximately 15	+3 stores (+25%)	Raised
Effective Tax Rate	FY2026	approximately 24.5%	approximately 24.3%	-0.2pts	Lowered

Reaffirmed unchanged this quarter: Net Interest Expense (approximately $2.3 billion), Capital Expenditures (approximately 2.5% of total sales)

Platform metrics

Q4 FY2025

Segment	Q4 FY2025
Comparable Sales (Q4)	+0.4%
Comparable Sales U.S. (Q4)	+0.3%
Comparable Sales (FY2025)	+0.3%
Comparable Customer Transactions (Q4)	-3.0%
Comparable Average Ticket (Q4)	+2.4%
Customer Transactions (Q4, millions)	366.5
Average Ticket (Q4)	$91.28

Profitability

Q4 FY2025

Segment	Q4 FY2025
Adjusted Operating Margin (Q4)	10.5%

Management tone

Narrative arc: Q1 "best positioned to win" → Q2 "notable improvement in underlying demand" → Q3 "consumer uncertainty disproportionately impacting demand" → Q4 "we have not yet seen a catalyst for an inflection in housing activity."

The recovery thesis has been formally retired. Q1 framed high rates as a headwind to be navigated; Q2 saw comps inflect positive and management began modeling H2 recovery; Q3 reclassified consumer uncertainty as the dominant drag; Q4 closes the arc with the cleanest admission yet: "we have not yet seen a catalyst for an inflection in housing activity." The "softer engagement in larger discretionary projects" phrase now enters its fifth consecutive quarter — confirmed as a permanent operating-environment assumption, exactly the signal the prior brief flagged to watch.

The weather alibi is gone — and management owns it. Q3 oscillated between blaming storm absence and blaming the consumer. Q4 settles the question: "Adjusting for storms, underlying demand was relatively stable throughout the year." That single line removes the entire "weather drove the miss" narrative that supported the Q3 framing, and replaces it with an admission that organic comp ran under 1% all year. It is more honest than Q3 — and worse for the bull case.

FY2026 framing arrived, but without a catalyst. The prior brief watched for whether Decker would provide an explicit 2026 framework or deflect a second time. He provided one — total sales +2.5–4.5%, comps flat–2%, adjusted EPS flat–+4% — but anchored it on continued pressure: "we anticipate these pressures will persist as we have not yet seen a catalyst for an inflection in housing activity." The guide is a base-rate forecast under stagnation, not a recovery forecast. Confidence migrated further from market outcomes to share gains: "we believe that we will grow market share in any environment by strengthening our competitive position." This is the third consecutive quarter where the equity story has been share-gain-within-stagnation, not market recovery.

Capital allocation telegraph: buybacks resume H1 2027. New disclosure in Q&A — Lasser drew out that share repurchases resume when excess cash position is achieved, expected H1 2027. Combined with the +3 stores raise (12 → 15) and reaffirmed 2.5% capex, management is signaling another year of reinvestment over return-of-capital, with the integration of SRS and GMS as the priority. This is a meaningful framework shift for an equity that historically traded on consistent buyback support.

Recurring themes management leaned on this quarter:

Market share gains despite industry headwindsHousing affordability pressures and low mortgage availabilityInterconnected omnichannel fulfillment as competitive advantagePro segment outperformance and ecosystem expansionStore associate engagement and operational restructuringConsumer uncertainty and trading-down behavior

Risks management surfaced:

Mortgage rate environment impacting housing affordabilityHousing turnover at historical lows since 2023Consumer concerns over inflation and job securityLarger discretionary projects under pressureLack of clarity on housing demand inflection catalyst

Q&A highlights

Stephen Forbes · Guggenheim

Asked about digital planning tools and key initiatives to improve the value proposition for pros in 2026, including product management improvements

Management detailed multiple pro-focused initiatives: achieved two sigma on-time and complete delivery, introduced AI-powered project management tools (AI takeoff, list builders), improved in-store tools and processes, expanded customer communications capabilities, and highlighted strong B2B online sales growth driven by projects tool with tens of thousands weekly starts. Emphasized record delivery reliability and trade credit growth.

Two sigma (99.95%) on-time and complete delivery achievedTens of thousands of projects started weekly through projects toolRecord delivery reliability from order management investmentsAI blueprints and takeoffs showing strong early performance

Zach Fadum · Wells Fargo

Asked about regional performance differences between markets with challenging housing dynamics (Florida, Texas) versus normalized markets, and implications for 2026 outlook given favorable factors (snow, tax refunds, tariffs)

Management noted comp performance was stable across all geographies throughout 2025 (under 1% consistent underlying demand) despite storm lapping. Emphasized that 2025 had zero storm activity, making it notable. On 2026, explained that while tax refunds could provide modest support (0.5 points at best), consumer uncertainty is the primary demand driver. Maintained flat to 2% comp guidance expecting market down 1% to up 1%. Noted tariffs represent mid-single digit exposure with ~3% like-skew price impact; mostly done with pricing actions related to April tariff impacts.

Under 1% consistent underlying comp demand across geographies in 2025Zero storm activity in 2025Tax refunds expected to provide ~0.5 points of comp support at midpoint (~$135B in total refunds)Company guidance: flat to 2% comps, market expectation: down 1% to up 1%

Michael Lasser · UBS

Asked whether SRS pricing aggression in Q4 will persist beyond Q1, whether such behavior appears in other categories, and how management would adjust capital allocation if housing turnover remained muted through 2027

Management stated pricing aggression is roofing-specific tied to 28% industry shipment decline and not expected to drive significant broader volatility. They emphasized not expecting robust building materials environment in Q1 and are supporting share gains through investments. On capital allocation, management affirmed commitment to current investment strategy even if turnover remains flat through 2026, targeting the $200B pro white space opportunity. Reiterated capital allocation principles: reinvest in business first with high ROI hurdle, then dividends, with share buybacks resuming when excess cash position achieved (expected H1 2027).

SRS roofing shipments down 28% YoY in Q4 (lowest since 2019)Pricing investment in Q4 and some bleed into Q1 to maintain shareNot expecting robust building materials environment in Q1$200B pro white space opportunity remains investment priority

Simeon Gutman · Morgan Stanley

Asked about consumer value consciousness trends and whether home-turning buyers are spending less on home improvements than in prior cycles, affecting the spending multiplier

Management noted balanced consumer behavior throughout 2025 with no significant broad-based trade-down despite some modest trade-down in countertops and appliances. Record sales during Black Friday and gift center events demonstrated strong engagement. On the spending multiplier, acknowledged that lower turnover creates more repair-versus-replace behavior among those anticipating moves. Referenced $22B cumulative underspend in aging homes as headwind, but stated this dynamic is unlikely to worsen and company is bouncing along the bottom on turnover.

Record Q4 event sales (Black Friday, gift centers)No broad-based trade-down observed; some modest trade-down in countertops and appliances only$22B cumulative underspend in aging homesLower turnover driving repair-versus-replace behavior among home sellers

Steven Zaccone · Citi

Asked about ticket versus transaction drivers in the outlook, timing of ticket impacts, and big ticket discretionary project trends versus replacement/maintenance mix in 2026

Management expects ticket to reflect ~3% average retail price increase (front-loaded early year, lower end year), with negative transactions offsetting that impact in guidance. Noted big ticket transactions (>$1,000) turned positive in multiple quarters, driven by maintenance/repair categories (plumbing, electrical, power tools) rather than appliances or discretionary projects. Cautioned that big ticket discretionary projects remain the key indicator of market inflection and have not yet turned positive.

Expected 3% ticket increase from price actions (higher early year, lower end year)Guidance assumes negative transactions offsetting ticket gainsBig ticket (>$1,000) transactions up 1.3% in Q4Positive big ticket driven by maintenance/repair (plumbing, electrical, power) not discretionary

Answers to last quarter's watch list

Q4 adjusted operating margin vs. ~10.3% implied — Q4 adjusted operating margin landed at 10.5%, narrowly above the implied 10.3% bar. FY adjusted operating margin closed at 13.1% vs. the revised 13.0% guide, and FY operating margin at 12.7% vs. 12.6% guide. The cut guide was met, not missed — credibility preserved, but only just.

Resolved positively

November/December U.S. comp trajectory — Management disclosed full monthly cadence: U.S. comps were -0.3% in November, -0.2% in December, and +1.4% in January (total company -0.2% / +0.1% / +1.3%). November and December remained negative; January storm activity drove the quarter to +0.3% U.S. The October -1.7% exit rate did not give way to a November/December recovery — the quarter was rescued by a single storm-aided month.

Resolved negatively

GMS organic contribution disclosure — Management did not disclose a combined SRS+GMS standalone comp or break out GMS organic growth from the FY2026 SRS "mid-single digits" framing. The vague disclosure pattern flagged in the prior brief continues.

Not resolved

2026 framing — Decker provided an explicit FY2026 framework this quarter: total sales +2.5–4.5%, comps flat–2%, adjusted EPS flat–+4%. But anchored explicitly on continued pressure with no catalyst for housing inflection. Framework provided, but without a recovery thesis.

Resolved negatively

Tariff absorption visibility in gross margin — Q4 gross margin came in at 32.6%, well below the 33.0% threshold the prior brief set as the tariff-bite confirmation. FY gross margin held the revised guide at 33.3%, but Q4 specifically showed material tariff absorption. The FY2026 gross margin guide of 33.1% extends the compression.

Resolved negatively

The "softer engagement in larger discretionary projects" phrase — Now in its fifth consecutive quarter, reinforced by Zaccone's Q&A confirmation that big-ticket discretionary has not turned positive. Management has formally adopted this as the FY2026 operating assumption rather than a transitory observation.

Resolved negatively

What to watch into next quarter

Q1 FY2026 gross margin vs. 33.1% FY guide: Q4 gross margin printed 32.6%, and McPhail explicitly guided H1 gross margin down ~50bps YoY (with the largest YoY impact in Q1) due to GMS annualization. Watch whether Q1 holds above the FY 33.1% guide — a Q1 print materially below 33.1% would imply the FY guide is at immediate risk.

April tariff anniversary and pricing actions: Management said pricing actions related to April tariff impacts are mostly done. Watch the Q1 call for explicit confirmation that the ~3% ticket lift from price is front-loaded as guided, and whether any further pricing rounds are signaled.

Comp transaction trend: Q4 comp transactions printed -1.6%, in line with Q3. Watch whether Q1 transactions hold the -1% to -2% range or worsen — sustained transaction decline with only ticket-driven comp support is fragile.

Big-ticket discretionary inflection: Management has explicitly named this as the key indicator of market inflection. Watch the Q1 disclosure on big-ticket >$1,000 broken into maintenance/repair vs. discretionary. Discretionary turning positive would be the first hard signal of recovery in two years.

GMS disclosure framework: With FY2026 SRS guided to mid-single-digit organic growth, watch whether Q1 introduces a same-store SRS+GMS comp or any framing that isolates organic HD performance. Continued vagueness signals organic comps are running below the headline.

Capital allocation timeline confirmation: Management telegraphed H1 2027 buyback resumption. Watch whether Q1 commentary holds that timeline or pushes it further out — slippage would imply integration spending or comp underperformance is consuming more cash than modeled.

Adjusted operating margin low end (12.8%): The widened range gives management 20bps of margin cushion vs. the prior point. McPhail guided Q1 EPS down mid-single-digits YoY, so a soft Q1 is in the plan — but watch Q1 adjusted operating margin against the implied trajectory, since a Q1 print well below the FY range would put the low end at risk early.

Sources

Home Depot Q4 FY2025 Press Release, filed 2026-02-24 — https://www.sec.gov/Archives/edgar/data/354950/000035495026000026/hd_exhibit991x02012026.htm
Home Depot Q4 FY2025 earnings call commentary (Decker, Campbell, Bastek, McPhail) — as cited in tone and Q&A inputs.

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