Home Depot issues 2026 guidance
Home Depot (HD) is bracing for a transitional 2026. The retailer issued guidance projecting total sales growth of 2.5% to 4.5% for the new fiscal year, with comparable sales expected to be flat to up 2%.
The guidance suggests Home Depot’s 2026 revenue of $170.5 billion to $172.1 billion, up from $164.7 billion in 2025. The Wall Street analysts’ consensus estimate was $171.2 billion.
Most importantly for investors, the company expects adjusted earnings per share to grow up to 4%, signaling a move to protect margins even as big-ticket DIY projects remain under pressure.
That guidance suggests EPS of $15.28, up from $14.69 in 2025. Wall Street was expecting $15.05.
The “Locked-In” Housing Reality
Home Depot’s cautious outlook is rooted in a housing market that remains functionally “frozen” for the average consumer.
Despite mortgage rates stabilizing near 6.01% in February 2026—the lowest level in over three years—existing home sales plunged 8.4% in January, according to the National Association of Realtors.
Related: Home Depot cuts back key employee benefit amid customer struggles
This paradox is driven by the “lock-in” effect: millions of homeowners are tethered to pandemic-era mortgage rates of 3% or lower, making them reluctant to sell and move.
Fast fact: 20% of all mortgages are locked in at rates below 3% and 51% are below 4%, according to Realtor.com.
With the average homeowner now staying in their property for 8.5 years, the longest tenure in a quarter-century, the typical “new home” renovation cycle has stalled. This has forced Home Depot to pivot its strategy toward maintenance and professional-grade projects rather than consumer-led remodels.
Industry Context & Stock Performance
The home improvement sector spent much of 2025 navigating a “K-shaped” recovery.
Real disposable income grew by roughly 1% year over year in December, yet consumer confidence has hovered near multi-year lows, according to The Conference Board, leading many to swap major renovations for smaller, essential repairs.
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“During the fourth quarter, we continued to see a resilient customer, though many continue to delay larger discretionary projects in this higher-for-longer interest rate environment,” said CEO Ted Decker.
Despite rallying 16% since September’s low, Home Depot’s stock price is about where it was trading in the Fall of 2024, suggesting many investors underperformed the broader market as the company’s sales and earnings growth stagnated.
The move up since September reflects optimism that lower interest rates will stimulate housing, boosting homeowner spending on home improvement.
“We continue to believe the broader home improvement space will see sequential improvement in 1H 2026 as it emerges from the post-COVID demand pull-forward hangover from the last 3 years,” said David Wagner, Head of Equity and Portfolio Manager at Aptus Capital Advisors.
It also reflects potential upside from Home Depot’s $18.25 billion acquisition of SRS Distribution, which is pivoting sales toward the arguably more stable “Pro” contractor market, helping reduce its reliance solely on DIY shoppers.
“We are encouraged by the momentum in our Pro ecosystem and the integration of SRS, which we believe positions us to take share in a recovering market,” said Decker.
The Q4 Backdrop
Home Depot’s guidance overshadowed a quarter that was technically a “beat” but showed the scars of a shorter fiscal calendar.
- Q4 Revenue: $38.2 billion (Down 3.8% YoY*)
- Adjusted Earnings: $2.72 per share (Down 13.1%), but above $2.58 estimates.
- Operating Margin: 10.5% (Down from 11.7% YoY)
- Comparable Sales: Up 0.4%, versus 0.8% last year; above -0.4% estimates.
- Comparable Customer Transactions: Down 1.6% YoY, versus up 0.6% last year.
*Note: Q4 2024 included an extra week, which added $2.5 billion in sales
