Home Depot Holds Guidance Steady as Sales Rise, But Margins Face Pressure
The Home Depot (NYSE: HD) reported first-quarter fiscal 2026 results that largely met internal expectations, as the home improvement giant navigated continued housing affordability pressures and cautious consumer spending while maintaining its full-year outlook.
Fundamentals: Stable Top-Line Growth Amid Margin Compression
The company posted first-quarter revenue of $41.8 billion, up 4.8% year over year. Comparable sales increased 0.6%, while U.S. comparable sales edged up 0.4%. Foreign exchange provided a modest boost, adding roughly 55 basis points to comparable sales growth. Comparable customer transactions fell 1.3%, and the comparable average ticket rose 2.2%.
Profitability, however, showed signs of pressure. Gross profit rose 2.4% to $13.8 billion, but gross margin narrowed to 33.0% from 33.8% a year earlier. Operating income declined 3.0% to $5.0 billion, while operating margin fell to 11.9% from 12.9% in the prior-year quarter. Non-GAAP operating income slipped 2.3% to $5.2 billion.
On the bottom line, net earnings declined modestly. Home Depot reported first-quarter net income of $3.3 billion, or $3.30 per diluted share, down from $3.4 billion, or $3.45 per diluted share, in the same period last year. Adjusted diluted EPS came in at $3.43, down 3.7% year over year.
Despite earnings pressure, Home Depot maintained strong cash generation. Operating cash flow totaled $6.0 billion during the quarter, while free cash flow reached $5.2 billion. The company returned capital to shareholders through $2.3 billion in dividends and repaid $2.4 billion in debt. Home Depot ended the quarter with $1.6 billion in cash and cash equivalents and total debt of $53.5 billion.
Expanding the Pro Market: The Mingledorff's Acquisition
On May 11, 2026, Home Depot’s subsidiary, SRS Distribution, completed the acquisition of Mingledorff's, LLC, a premier wholesale distributor of heating, ventilation, and air conditioning (HVAC) equipment.
The acquisition adds HVAC distribution as a new growth vertical for SRS and further broadens Home Depot’s reach with professional contractors. Management estimates the HVAC distribution market alone represents a roughly $100 billion opportunity, lifting the company’s total addressable market to approximately $1.2 trillion. Integrating Mingledorff's deep HVAC expertise allows Home Depot to establish cross-selling synergies and position itself as a single-source partner for general contractors, remodelers, and multifamily builders.
Fiscal 2026 Guidance
Management reaffirmed fiscal 2026 guidance, signaling confidence in business stability despite macroeconomic uncertainty. Home Depot continues to expect total sales growth of approximately 2.5% to 4.5%, comparable sales growth ranging from approximately flat to 2.0%, and diluted earnings per share growth of approximately flat to 4.0% from fiscal 2025 levels. The company also expects net interest expense of approximately $2.3 billion and capital expenditures to remain at approximately 2.5% of total sales.
HD Stock Technical Analysis
From a stock perspective, traders are closely watching several key technical levels.
In the short term, $339 remains the immediate resistance level for HD stock. A sustained move above $339 could open the path toward the next major resistance near $350.
However, if the stock fails to hold momentum above that zone, downside pressure could send shares back toward the key support level around $289. A deeper pullback could potentially test the secondary support area near $275.
For the medium term, a more significant resistance level sits at $376, which could become the next major upside target if fundamentals improve and broader housing sentiment strengthens.