Home Depot 2026 Outlook Signals Modest Sales, Profit
Home Depot 2026 outlook ties cautious baseline to weak housing, projects modest sales and EPS growth, and makes upside conditional on a housing rebound.
KEY TAKEAWAYS
- Reaffirmed fiscal 2025 guidance and established a preliminary fiscal 2026 outlook and upside market recovery case.
- Baseline assumes no housing inflection and forecasts total sales growth of 2.5%-4.5% and EPS growth of 0%-4%.
- Market recovery case models stronger sales up to 6.5% and diluted EPS growth 7%-11%.
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The Home Depot, Inc. (HD) on Dec. 9 reaffirmed fiscal 2025 guidance and issued a preliminary 2026 outlook that assumes no near-term improvement in U.S. housing activity. The company projects low single-digit sales gains and modest earnings per share (EPS) growth, while modeling a stronger recovery case if housing rebounds.
Reaffirmed 2025 Guidance and Preliminary 2026 Outlook
In a press release dated Dec. 9, Home Depot provided a strategic update reaffirming its fiscal 2025 targets and outlining a preliminary fiscal 2026 baseline and an upside market recovery case. For fiscal 2025, ending Feb. 1, 2026, the company expects total and comparable sales to decline 1.0% to 0.0% versus fiscal 2024. Diluted EPS is projected to fall 5.0% to 3.0%, with an operating margin near 14.0%, net interest expense around $1.8 billion, an effective tax rate close to 24.5%, and capital expenditures of about $3.0 billion.
The fiscal 2026 baseline assumes no meaningful improvement in housing activity, including home turnover and big-ticket project demand. It projects total sales growth of 2.5% to 4.5% over fiscal 2025, comparable sales growth of 0% to 2%, an operating margin between 12.4% and 12.6%, diluted EPS growth of 0% to 4%, net interest expense near $1.9 billion, an effective tax rate around 24.5%, and capital expenditures steady at $3.0 billion.
Market Recovery Scenario and Strategic Priorities
The company’s upside market recovery case assumes a gradual rebound in housing activity, including improved existing-home turnover and project demand. Under this scenario, Home Depot forecasts total sales growth of 4.5% to 6.5%, comparable sales growth of 2% to 4%, an operating margin rising toward 13.5% to 14.0%, and diluted EPS growth of 7% to 11% versus fiscal 2025.
At its investor conference, management emphasized its "Total Home" strategy to capture a larger share of both professional (pro) and do-it-yourself (DIY) spending. The company plans to deepen its focus on pro and complex projects, expand retail media and digital capabilities, and continue investing in supply chain and merchandising productivity as well as the in-store customer experience. Capital allocation will prioritize sustaining dividends and share repurchases, subject to business performance and investment needs, with no new repurchase authorization announced.
The fiscal 2026 guidance ranges fall below prevailing analyst estimates. Management noted that growth would accelerate under the recovery case if housing activity improves.
“Looking forward to 2026, we anticipate these pressures will persist, as we have not yet seen a catalyst for an inflection in housing activity,” the company said in the press release.
