Home Depot on Tuesday reported second-quarter results for fiscal 2026 that exceeded analyst expectations, with adjusted earnings per share rising 5.1% year-over-year to $4.92, beating the $4.73 consensus by 4%. Revenue increased 5.7% to $47.86 billion, surpassing the $47.23 billion estimate by $630 million.
Comparable sales grew 1.7% overall, led by a 1.3% rise in U.S. comps. Monthly comps accelerated from 1.2% in May to 2.3% in July, while digital sales climbed 11% for the fifth consecutive quarter of double-digit growth. The average ticket rose 2.8%, though transactions declined 1% year-over-year. Gross margin expanded by 25 basis points to 33.7%, supported by $685 million in IEEPA tariff refunds that reduced cost of goods sold and added about 145 basis points to gross margin.
Executives highlighted operational improvements, including faster delivery speeds for in-stock products and reduced lead times for big-ticket items. Over 65% of parcel deliveries now arrive same-day or next-day, while next-day appliance delivery coverage reaches nearly 60% of the population. The company also noted that 100% of stores qualified for its hourly associate profit-sharing program based on first-half results.
Despite these gains, operating margin declined to 14.3% from 14.5%, while adjusted operating margin fell to 14.7% from 14.8%. Return on invested capital decreased to 24.8% from 27.2%, and inventory turnover slowed to 4.5 times from 4.6 times. Merchandise inventories totaled $26.8 billion, up $2 billion year-over-year.
For the full year, Home Depot maintained its outlook, projecting comparable sales growth between flat and 2%, total sales growth of 2.5% to 4.5%, and adjusted operating margin of 12.8% to 13.0%. Diluted EPS is expected to range from flat to up 4% compared with fiscal 2025. The company plans to open about 15 new stores and 40 to 50 SRS branches in 2026, with capital expenditures set at roughly 2.5% of sales.
Shares rose 0.75% in premarket trading to $340.40 after closing at $337.88 on Monday. The stock has traded between $289.10 and $426.75 over the past 52 weeks, with a market capitalization of $339.83 billion and a trailing P/E ratio of 24.02.
