ATLANTA, August 20, 2026, 08:18 EDT — U.S. cash markets are pre-open.
- Home Depot’s second-quarter gross margin rose 25 basis points, but a tariff refund added 145 basis points.
- Comparable sales increased 1.7% as average ticket rose 2.8% and transactions fell 1.0%.
- Management kept full-year guidance unchanged despite beating quarterly sales and earnings expectations.
The Home Depot, Inc. NYSE:HD delivered a clean second-quarter sales beat. Its margin bridge was less tidy. A $685 million tariff refund lifted gross margin by 145 basis points, masking roughly 120 basis points of pressure from other costs and acquisitions.
That timing benefit matters more than the headline beat. Management expects the refund to be fully offset by unplanned costs this year. It also expects some second-quarter benefit to reverse in the third quarter.
Sales rose 5.7% to $47.86 billion. Comparable sales grew just 1.7%, leaving a four-point gap supplied by acquisitions, new stores and other non-comparable growth. Adjusted earnings reached $4.92 a share, above the $4.73 analyst estimate reported by Reuters.
| Q2 measure | 2026 | 2025 | Change |
|---|---|---|---|
| Sales | $47.86bn | $45.28bn | +5.7% |
| Comparable sales | +1.7% | — | — |
| Net earnings | $4.77bn | $4.55bn | +4.7% |
| Adjusted EPS | $4.92 | $4.68 | +5.1% |
| Adjusted operating margin | 14.7% | 14.8% | -10 bps |
Chief Financial Officer Richard McPhail said, “Our second quarter results exceeded our expectations.” Customers kept tackling smaller projects, while expensive financed work stayed weak. Housing turnover remains near historic lows.
The sales mix shows that strain. Comparable transactions fell 1.0%, but average ticket increased 2.8% to $92.50. Inflation and larger professional orders carried more weight than customer traffic.
| Q2 gross-margin bridge | Impact |
|---|---|
| IEEPA tariff refund | +145 bps |
| Unplanned fuel, energy and product costs | -60 bps |
| Acquisition mix | -60 bps |
| Reported year-on-year change | +25 bps |
Professional customers remain the stronger lane. Home Depot said 90% of its stores closed an SRS-facilitated sale through QuoteCenter during the past year. It expects SRS organic sales to rise at a mid-single-digit rate in fiscal 2026.
That integration can widen Home Depot’s lead in complex jobs. Yet it also adds lower-margin revenue. The acquisition mix alone cut second-quarter gross margin by 60 basis points.
| Q2 comparison | Home Depot | Lowe’s |
|---|---|---|
| Sales | $47.86bn | $25.96bn |
| Comparable sales | +1.7% | +0.2% |
| Adjusted / diluted EPS | $4.92 adjusted | $4.27 diluted |
| Full-year comp outlook | 0% to +2% | About flat |
Home Depot reaffirmed fiscal-year sales growth of 2.5% to 4.5%. It kept comparable-sales guidance at flat to 2% growth. Adjusted EPS should range from flat to 4% growth.
The shares closed Wednesday at $344.30, up 2.02%. That leaves 8.6% upside to the $374.06 consensus target. The dispersion is wide, however.
| Analyst | Rating | Target | Latest action |
|---|---|---|---|
| TD Cowen | Buy | $410 | Reiterated, Aug. 19 |
| Truist | Buy | $373 | Raised from $369, Aug. 19 |
| RBC Capital | Sector Perform | $342 | Lowered from $343, Aug. 19 |
| Wells Fargo | Buy | $400 | Aug. 11 |
| Bernstein | Hold | $344 | Aug. 12 |
RBC’s caution captures the debate. It said the quarter would have disappointed without lumber inflation and the refund. TD Cowen instead cited stronger comps and an easier second-half setup.
Risks: Housing turnover could stay depressed, while tariff, fuel and product costs squeeze margins. Faster professional growth may lift sales but dilute profitability.
The next test is margin quality. Investors need stronger traffic or sustained pro volumes once the refund benefit fades. The second-quarter beat bought time, not certainty.
Related articles: NYSE:HD
The beat came with a margin clock
Market data: $344.30 close
August 19, 2026, 4:00 p.m. EDT
U.S. market closed at timestamp
Gross-margin bridge: the 25 bp gain was timing-heavy
The $685 million refund added 145 basis points. Management expects unplanned costs to offset the refund across the full year.
Growth quality
Ticket carried comparable growth. Traffic still fell, while acquisitions and new stores widened the gap between total and comparable sales.
Home Depot held the stronger line
| Q2 | Home Depot | Lowe's |
|---|---|---|
| Sales | $47.86B | $25.96B |
| Comp sales | +1.7% | +0.2% |
| FY comp guide | 0% to +2% | About flat |
| Guide action | Reaffirmed | Cut |
