HD Q2 2026 Earnings Analysis
Home Depot's Q2 2026 sales reached $47.9B (+5.7% YoY) with comp sales +1.7%; adjusted EPS $4.92 (+5.1%), beating expectations through market share gains despite housing headwinds.
Key Metrics
Puntos clave
- Sales of $47.9B (+5.7% YoY) with comp sales +1.7%, showing share gains despite market headwinds.
- Q2 exceeded expectations with adjusted EPS of $4.92 (+5.1% YoY) and online sales +11%.
- Pro business comped positive with strong delivery speeds (65% same-day/next-day parcel).
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// Full episode scriptWELCOME TO BETA FINCH: HOME DEPOT Q2 2026
Welcome to Beta Finch, your AI-powered earnings breakdown. I'm Alex, joined as always by Jordan, and today we're digging into Home Depot's second quarter fiscal 2026 numbers. Big one — the world's largest home improvement retailer, a lot of moving pieces this quarter.
Lots to get into, including some tariff refund math that tripped up a few analysts on the call.
We'll get there. But first, the standard disclosure: this podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.
Good to have that on record. So, headline numbers — Home Depot posted $47.9 billion in sales, up 5.7% year-over-year. Comp sales up 1.7% overall, 1.3% in the U.S. specifically.
And adjusted diluted EPS came in at $4.92, versus $4.68 a year ago. That actually beat expectations — management said the quarter exceeded what they'd planned for.
Worth noting right up top — before the numbers, CFO Richard McPhail addressed CEO Ted Decker's temporary medical leave of absence. Leadership wished him a quick recovery and said Ann-Marie Campbell and the broader team are steering the ship in the meantime.
Good context to have. Now let's talk about what actually drove the quarter, because it's a broader story than just "big box retailer sells more stuff." Thirteen of sixteen merchandising departments posted positive comps — storage, electrical, hardware, power tools, plumbing, paint, flooring, you name it.
And it wasn't just seasonal stuff either. Merchandising EVP Billy Bastek made a point of saying only 3 of their top 20 performing categories were seasonal — the "middle of the store," as he called it, core home improvement categories, is where the real strength showed up.
Portable power was a standout — Q2 was literally a record-setting quarter for portable power tools. And Pro customers outperformed DIY again, continuing a trend we've heard from Home Depot for a while now.
The Pro story is interesting because it's not just one thing — it's an ecosystem play. QuoteCenter, the SRS acquisition, GMS, purchase cards — they're stitching all of this together so a Pro can basically source everything through the Home Depot family instead of shopping around. Ann-Marie Campbell said 90% of stores closed a sale through SRS's catalog in the last 12 months.
That's a real flywheel if it keeps compounding. And on the digital side — online comp sales grew 11%, the fifth straight quarter of double-digit growth. They also launched Express Delivery nationwide this month — three-hour delivery on tens of thousands of products, with most actually arriving in under an hour.
That's a meaningful shift. Delivery lead times are down about 45% over the last 18 months. For a company built on people driving to an orange box store, leaning this hard into fast delivery — including big and bulky items and even next-day appliance delivery in some markets — signals they're taking the fight to online-only competitors pretty seriously.
Now, let's talk about the part of the call that generated the most back-and-forth — gross margin and tariffs.
Right, so this is the one investors were parsing closely. Home Depot received $730 million in IEEPA tariff refunds this quarter, and $685 million of that flowed through and reduced cost of goods sold. That gave gross margin a roughly 145 basis point boost.
But — and this is the nuance — that benefit was largely offset by rising costs elsewhere. About 60 basis points of pressure from fuel, energy, and other input costs, plus another 60 basis points from a mix shift tied to the GMS acquisition. Net-net, gross margin only rose about 25 basis points to 33.7%.
A few analysts pushed on this — basically asking, "did you actually miss on underlying profitability once you strip out the one-time refund?" McPhail pushed back pretty firmly, saying if you exclude tariff refunds entirely, they still would have exceeded their own expectations — it just would have shown up as a different mix of costs and pricing rather than a clean refund benefit.
He also flagged that this refund is basically a one-time, largely non-recurring item — an "immaterial" amount might trickle in during the back half, but that's it. And importantly, they expect gross margin in Q4 to land roughly flat year-over-year once that tailwind fully laps.
One more wrinkle worth mentioning — Section 301 tariffs replaced the expiring Section 232... sorry, they referenced Section 101 expiring and being replaced by Section 301 rules in July, which added cost pressure that wasn't in their original 2026 plan. So it's a genuinely dynamic tariff environment they're managing through, not a one-and-done issue.
On guidance — Home Depot reaffirmed its full-year outlook. Comp sales guided flat to 2% growth, total sales growth of 2.5% to 4.5%, gross margin around 33.1% for the year, and adjusted operating margin of 12.8% to 13%. EPS growth guided flat to 4%.
Reaffirming rather than raising guidance despite the Q2 beat is a signal in itself — management sounded genuinely optimistic about current trends, McPhail noted Q3 has started consistent with Q2's demand, but they're clearly still cautious about housing. Housing turnover remains near historic lows, and they said there's no clear sign of an inflection point yet, even with recent moves in rates.
That's really the tension running through this whole call — strong execution and share gains in a housing market that's still frozen. Big-ticket discretionary projects, the kind tied to financing, remain under pressure. But smaller repair-and-maintenance spending, portable power, patio, storage — that's where the strength is.
And geographically it wasn't just a U.S. story — Canada and Mexico both out-comped the total company, and SRS comped above the company average with positive results across all its verticals, which is notable given SRS had actually lagged the company average in the first half.
So, what does this mean for anyone following the stock? Solid execution, real share gains according to management, a tariff refund that flattered this quarter's margin but won't repeat, and a housing backdrop that's still the biggest wildcard for when — or if — bigger remodeling projects come back.
Before we close — everything discussed is AI-generated analysis for educational purposes. Past performance doesn't guarantee future results. Please do your own due diligence.
Well said. All eyes now turn to Q3 earnings in November, and whether that Pro and delivery flywheel keeps gaining momentum even if housing stays frozen.
Thanks for tuning in to Beta Finch — we'll catch you next time.
See you then.