In-line print, guidance reaffirmed.

4.8% sales growth, 0.6% total comp driven entirely by ticket, and full-year guidance reaffirmed but not raised in a soft housing environment.

The Home Depot (NYSE: HD) reported first-quarter fiscal 2026 results (quarter ended May 3, 2026) on May 19, 2026, posting net sales of $41.77 billion (up 4.8% YoY, beating the $41.52B consensus), comparable sales of +0.6% total (U.S. +0.4%), and GAAP diluted EPS of $3.30 (down 4.3% YoY). Adjusted diluted EPS of $3.43 came in roughly two cents ahead of consensus but was down 3.7% versus the prior-year quarter. The print was in line with management's expectations and the full-year fiscal 2026 guidance was reaffirmed, not raised.

The two pieces of the underlying story were: (1) comp sales returned to positive territory after several quarters of negative U.S. comps, driven entirely by average ticket growth (+2.2%) offsetting persistent customer transaction weakness (-1.3%); and (2) Pro engagement continued to outpace DIY, with SRS Distribution and recently acquired GMS providing tailwinds to the professional channel. Operating margin compressed 100 basis points YoY to 11.9% GAAP and 12.3% adjusted, primarily from the dilutive SRS mix and incremental shrink pressure.

Headline KPIs at a Glance

Ticket up, transactions down.

Net sales of $41.77 billion grew 4.8% YoY, with the contribution split between low-single-digit comp growth and the inorganic contribution from SRS Distribution (acquired in 2024) and GMS (acquired in 2026). Foreign exchange provided a modest 55 basis point tailwind to total company comparable sales. Customer transactions of 391.1 million declined 0.9% YoY. Average ticket of $92.76 grew 2.3%.

Margins compressed across the P&L

Net earnings of $3.29 billion declined 4.2% YoY, translating to GAAP diluted EPS of $3.30 (down 4.3%). Operating cash flow of $6.03 billion grew 39% YoY, comfortably funding $2.32 billion in cash dividends and $844 million of capital expenditures in the quarter. Adjusted operating margin of 12.3% (versus 13.2% prior year) reflected the mix headwind from SRS / GMS plus incremental SG&A investment.

Pro outpaces DIY, SRS and GMS extend reach.

Pro vs. DIY. Pro posted positive comps and clearly outpaced DIY in Q1. Management commentary on larger Pro projects (extensions, kitchens, roofs) was incrementally more positive, partly aided by the SRS and GMS acquisitions, which provide deeper access to residential roofing, drywall and specialty-distribution Pro segments.

Category mix. Building materials, plumbing and electrical outperformed; lumber and big-ticket interior categories underperformed. Power tools and equipment rental both posted positive comps. Average ticket of $92.76 was up 2.3%, driven primarily by the Pro mix shift rather than broad price increases.

SRS / GMS integration. Integration is on track. Cross-sell opportunities, particularly into residential roofing and specialty Pro categories, are an underappreciated growth lever for 2026 to 2027 and provide a structural margin headwind in the near term that should reverse as scale-economy benefits flow through.

Stores and footprint. Home Depot operated 2,361 retail stores plus 1,280 SRS locations at quarter-end across all 50 U.S. states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, all 10 Canadian provinces and Mexico. The company plans approximately 15 new store openings in fiscal 2026.

FY26 outlook reaffirmed.

Surprises and their stock-price implications

• Comp sales returned to positive territory. U.S. comps of +0.4% (and total comp of +0.6%) ended the streak of negative U.S. comps. While modest, the directional inflection is meaningful for a stock whose multiple has been compressed by the housing-turnover stall.
• Adjusted EPS of $3.43 beat consensus by $0.02. The beat was modest but came in the context of operating margin compression and the inorganic dilution from SRS / GMS. Underlying retail performance was slightly better than expected.
• Operating cash flow grew 39%. Working capital normalization and inventory discipline drove substantially better cash conversion versus the prior year. Free cash flow generation supports the dividend and the eventual buyback resumption.
• Pro engagement outpaced DIY. Larger Pro projects appear to be reaccelerating, with SRS / GMS providing additional channel reach.
• FY26 guidance reaffirmed, not raised. Management chose not to raise full-year guidance despite the Q1 beat, reflecting appropriate caution about the housing macro and visibility limitations.
• Buyback suspension extended to fund GMS acquisition. Management indicated buybacks will resume in the second half. The capital allocation pivot is strategically sound but a near-term technical headwind.

Buy consensus, ~31% implied upside.

HD shares closed May 19 at approximately $302 ahead of the print and traded near that level post-print. The stock remains close to its 52-week low of $289.10 (set May 4, 2026) and approximately 30% below its 52-week high of $426.75 set September 17, 2025. Year to date the stock has underperformed the S&P 500 consumer discretionary index, reflecting persistent housing-turnover concerns. The current market capitalization stands at approximately $300 billion.

Analyst recalibration

Sell-side sentiment going into the print was constructive but cautious on the macro. The consensus rating is Buy, with 42% Strong Buy, 38% Buy and 21% Hold. S&P Global reports a 12-month average price target near $395, with a Street high of $481 and recent low of $335.

Housing turnover, mix and tariffs.

Primary risks

• Housing turnover. U.S. existing-home turnover remains at multi-decade lows. Until mortgage rates ease and transaction volumes recover, big-ticket discretionary categories will lag.
• Margin pressure from SRS / GMS mix. Specialty distribution carries structurally lower margins than retail. Until scale economies offset the mix headwind, consolidated margins will face pressure.
• Tariff exposure. Home Depot imports a meaningful share of its merchandise. Higher tariffs could compress gross margin or require selective price increases that could affect comp transactions.
• Consumer balance sheet. Sustained job market weakness or wage growth deceleration would directly affect discretionary home-improvement spending.
• Buyback timing. The pause to fund GMS removes a near-term technical support level. Resumption of buybacks in the second half is a watch item.

Catalysts to watch

• Q2 FY26 print (mid-August 2026) and updated housing turnover commentary.
• U.S. mortgage rate trajectory and existing-home sales data.
• SRS / GMS cross-sell milestone disclosure.
• Pro initiative metrics: trade credit, account growth.
• Buyback resumption in second half of FY26.
• Hurricane / weather event spending (a historical positive comp driver).