Key Takeaways for The Home Depot Stock as of August 2026
- Tariff-Flattered Beat: Home Depot stock’s parent company posted Q2 sales of $47.9B, up 5.7% YoY, with adjusted EPS of $4.92 versus $4.68 a year ago, though $685M in one-time IEEPA tariff refunds drove roughly 145 basis points of the quarter’s 25-basis-point gross margin gain.
- Guidance Held: Home Depot reaffirmed its full fiscal 2026 outlook, unchanged from last quarter.
- Pro and SRS Momentum: Pro sales posted a positive comp and outperformed DIY for the quarter, while SRS, the company’s roofing and building-products distributor, comped above the total company average with positive results across every vertical it serves.
- CFO on Tariff Timing: CFO Richard McPhail called the refund “a market-borne benefit,” and said the company used it to offset rising fuel, energy, and input costs rather than let it fall straight to the bottom line.
Home Depot’s Q2 Beat Leaned on Tariff Refunds, But Pro Kept Growing
Home Depot (HD) posted second-quarter sales of $47.9 billion, up 5.7% from a year ago, with adjusted diluted earnings per share climbing to $4.92 from $4.68. Total comp sales rose 1.7%, and comps in the United States gained 1.3%, marking an acceleration from May’s 0.5% pace to 2.2% by July. That trajectory looked strong on its face, but the gross margin line tells a more complicated story.
Home Depot booked $730 million in IEEPA tariff refunds during the quarter, with $685 million of that flowing directly through cost of goods sold as a 145-basis-point tailwind to gross margin. That benefit was mostly offset by 60 basis points of incremental fuel, energy, and input cost pressure, plus another 60 basis points of margin dilution tied to the GMS and Mingledorff’s acquisitions, leaving gross margin at 33.7 percent, up just 25 basis points year over year. Strip out the refund entirely and margin would have compressed rather than expanded, a fact CFO Richard McPhail addressed head-on on the Q2 earnings call: “Tariff refunds are a market-borne benefit, they’re not unique to The Home Depot.” His point was that the refund let Home Depot hold pricing steady for customers rather than pass rising input costs through, and management expects Q4 gross margin to land roughly flat against last year once the refund’s timing benefit fully laps.
Beneath the tariff noise, the operating story held up. Pro sales posted a positive comp and outperformed DIY, with strength in portable power, decking, dimensional lumber, and fasteners. SRS, the roofing and building-products distributor Home Depot has been integrating, comped above the company average and posted positive results in every vertical it serves, a sharp turn from the storm-activity drought that pressured SRS through late 2025. Online comp sales grew 11 percent, the fifth straight quarter of double-digit digital growth, and the company used the call to announce nationwide Express Delivery, promising three-hour turnaround on tens of thousands of parcel SKUs.
Operating margin slipped to 14.3% from 14.5%, and adjusted operating margin eased to 14.7% from 14.8%, reflecting a 45-basis-point rise in operating expense as a percent of sales. Return on invested capital fell to 24.8% from 27.2%, a byproduct of the GMS deal adding debt and assets to the balance sheet. Home Depot reaffirmed its full fiscal 2026 guidance: comps of flat to 2%, total sales growth of 2.5% to 4.5%, adjusted operating margin of 12.8% to 13%, and diluted EPS growth of flat to 4%. The company also disclosed CEO Ted Decker’s temporary medical leave, with McPhail and Ann-Marie Campbell stepping in to run the business alongside the existing leadership team.
TIKR Values Home Depot Stock at $515, Pricing In Sustained Pro Share Gains
TIKR’s mid-case model values Home Depot at $515 by January 2031, implying a 53% total return from the current price of $337.49, or 10% annualized over 4.4 years.
That annualized return sits well above what a mature, dividend-paying retailer of Home Depot’s size typically commands, positioning Home Depot stock as a share-gain story rather than a slow-growth income play priced for the sector norm.
The target leans on the same dynamics that showed up in the Q2 print: a Pro business that keeps outperforming DIY, an SRS integration that swung from a comp drag to a comp contributor, and delivery-speed investments like Express Delivery and same-day parcel fulfillment that are pulling online growth into double digits for a fifth straight quarter. Home Depot stock’s path to that target does not require the tariff refund to repeat, since the underlying operating momentum in Pro and digital is what the model is pricing.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
