Quick Read
- Home Depot reaffirmed its 2025 guidance, expecting about 3% sales growth and steady margins.
- The company’s 2026 outlook was more cautious, projecting flat to 4% adjusted EPS growth—below analyst expectations.
- Shares of Home Depot fell over 1% in premarket trading after the update, as reported by CNBC.
- Management sees stronger growth potential if housing activity rebounds, but economic uncertainty persists.
Home Depot Sets Sights on Growth but Investors React to Modest 2026 Guidance
Home Depot, the world’s largest home improvement retailer, entered the spotlight this week as it hosted its 2025 Investor and Analyst Conference in Atlanta. While the company reaffirmed its fiscal 2025 guidance and introduced a clear roadmap for future growth, Wall Street’s attention quickly shifted to its conservative preliminary outlook for 2026—and the market responded with a dip in the company’s stock price.
2025 Guidance Reaffirmed: Steady but Not Spectacular
At the heart of the conference was Home Depot’s commitment to delivering shareholder value through what it calls its “core and culture,” a frictionless interconnected experience, and a focus on professional customers. CEO Ted Decker emphasized that “the investments we’ve made over the last several years have further strengthened our distinct competitive advantages and position us well to grow share in an approximately $1.1 trillion total addressable market.”
For fiscal year 2025—a 52-week year compared to 53 weeks in 2024—the company reiterated its earlier guidance:
- Total sales growth of about 3%
- Gross margin around 33.2%
- Operating margin approximately 12.6%
- Adjusted operating margin about 13.0%
- Net interest expense near $2.3 billion
- Capital expenditures at roughly 2.5% of total sales
- A modest decline in diluted earnings per share (EPS), down about 6% from $14.91 in fiscal 2024, and adjusted EPS down about 5% from $15.24
Management also projected the opening of 12 new stores, aiming to maintain its expansive footprint of over 2,350 retail locations and more than 1,200 SRS sites across the U.S., Canada, and Mexico. The company, with over 470,000 employees, remains a staple of the Dow Jones Industrial Average and S&P 500.
2026: Cautious Optimism, Market Waits for Housing Tailwinds
Home Depot’s preliminary fiscal 2026 outlook, however, is where investor excitement tapered. The company forecast:
- Home improvement market growth in a range of -1% to +1%
- Comparable sales growth flat to 2%
- Total sales growth between 2.5% and 4.5%
- Operating margin in the 12.4% to 12.6% range
- Adjusted diluted EPS to rise only 0% to 4%
According to CNBC, analysts polled by FactSet had hoped for an EPS expansion closer to 5.2%. The company’s forecast, falling short of these expectations, led to Home Depot’s stock sliding more than 1% in premarket trading on the day of the announcement. The tepid guidance reflects both ongoing uncertainty in the housing market and caution about consumer spending on large projects—a theme echoed by other players in the home improvement and building sectors.
Richard McPhail, Home Depot’s CFO, underscored the link between housing activity and the company’s growth potential: “Our Market Recovery Case reflects our performance expectations once we see momentum in housing activity and increased spend on larger projects driven by pent-up demand. We believe that the pressures in housing will correct and provide the home improvement market with support for growth faster than the general economy, and we expect to continue to grow faster than our market.”
Market Recovery Case: A Glimpse of Upside Potential
Not all was caution and conservatism at the event. Home Depot also outlined a “Market Recovery Case”—a scenario in which a rebound in the housing market would drive:
- Total sales growth of 5% to 6%
- Comparable sales up 4% to 5%
- Operating profit growth outpacing sales
- Diluted EPS growth in the mid-to-high-single-digits
McPhail added that in an “Accelerated Recovery Case,” even sharper gains could be possible if housing demand returns more quickly than expected. However, these rosier projections hinge on external economic factors that remain outside the company’s control.
Wall Street’s Response: Measured Skepticism
Despite Home Depot’s robust strategic positioning and long-term vision, the immediate market reaction was subdued. CNBC reported that the stock’s premarket decline reflected investor disappointment with the 2026 adjusted EPS forecast. The broader market context, with other retailers and homebuilders also facing mixed outlooks, contributed to a sense of caution among analysts and shareholders alike.
The company’s continued focus on operational discipline—managing margins, investing in core capabilities, and expanding its omnichannel experience—offers reassurance to long-term investors. Yet, for those seeking quick rebounds or outsized growth, Home Depot’s messaging was clear: the pace of improvement depends heavily on macroeconomic recovery, especially in housing.
Management cautioned that all forward-looking statements are subject to risks and uncertainties, referencing both the unpredictability of the macroeconomic environment and the evolving nature of consumer demand.
Conclusion: A Solid Foundation with Eyes on the Horizon
Home Depot’s latest strategic update highlights the company’s resilience and its readiness to capture more of the $1.1 trillion home improvement market. Its careful 2026 outlook signals realism in the face of macroeconomic headwinds, while the recovery scenarios provide a glimpse of what could be possible if consumer confidence and housing activity return in force.
For investors, the message is one of patience: Home Depot remains a dominant player with enviable scale and execution, but outsized returns in the near term may require a broader economic tailwind to materialize.
Home Depot’s strategic discipline stands out in a volatile market. While the 2026 guidance disappointed some investors, the company’s ability to adapt and invest for the long term, coupled with its candid acknowledgment of market uncertainties, positions it as a resilient leader poised to benefit when housing fundamentals improve. The key question is not if—but when—the market’s recovery will unlock Home Depot’s next wave of growth.