Home Depot posted $45.27B in Q2 revenue with US sales growth, a stock surge, and a reaffirmed 2025 forecast despite a profit shortfall.

Home Depot remained firm on Tuesday about its full-year guidance. Quarterly sales and profits missed Wall Street’s expectations, but this still happened. The US home market seems to have recovered thanks to a drop in interest rates, and Home Depot’s (HD) stock rose as much as 4% on Tuesday after the business said that same-store sales growth improved during the second quarter.

For the second quarter, the firm announced that same-store sales increased by 1%, marking the second consecutive quarter of growth. The US had a 1.4% year-over-year gain in same-store sales for the third consecutive quarter.

The home improvement retailer restated its forecast for full-year total sales growth of 2.8% and comparable sales growth of around 1%, excluding the effect of one-time events like as store openings and calendar changes.

However, it missed Wall Street’s earnings expectations for the second straight quarter.

Shares of Home Depot rose about 4% in early trading.

Wall Street’s projections: According to an LSEG poll of analysts, Home Depot’s fiscal second-quarter results were as follows, in comparison.

Earnings per share: $4.68 adjusted vs. $4.71 expected

Revenue: $45.28 billion vs. $45.36 billion expected

In the three months that ended Aug. 3, Home Depot’s net income was $4.55 billion, or $4.58 per share, down slightly from $4.56 billion, or $4.60 per share, in the year-ago period. Compared to $43.18 billion in the same time last year, revenue increased by about 5%.

In the second quarter, Home Depot did well. Comparable sales rose 1.4% in the US and 1% globally. In more than two years, the firm has performed at its best, with revenue growth that is the greatest in that time.

Betting on the pros

Home Depot had success with professional-friendly categories, including decking, concrete, and timber, and with seasonal items like barbecues and live plants from the gardening area. Online sales increased by almost 12% from the same period last year, thanks to the company’s quicker delivery times.

Although tariffs have made the future of retailers more unclear, Home Depot has no intention of raising prices across its shops. The United States has altered its tariff rules since May, and starting in early August, many of its trade partners will face higher taxes. During the quarter, the majority of its imported goods arrived before tariffs.

Home Depot may be able to withstand ongoing cost increases since its clientele is typically in a better financial position than other Americans. Approximately 90% of its do-it-yourself clients are homeowners, and homeowners often employ the home improvement specialists who shop at Home Depot.

CEO Ted Decker reported a 3.3% increase in same-store sales in Q2, with May and June’s increases being less than 1%. Ticket growth was 1.4%, while transaction growth fell slightly due to higher-priced goods and a decrease in promotional activity.

Tickets worth over $1,000 increased by 2.6% compared to Q2 2024. Executive vice president of merchandising Billy Bastek noted softer engagement in larger discretionary projects, where customers typically use financing to fund renovations. The company’s Q2 earnings call revealed a 2.6% increase in tickets worth over $1,000.

Home Depot’s online and in-store customer transactions decreased to 446.8 million during the quarter from 451 million during the same time last year. Nonetheless, consumers spent a little more money on those purchases; the average ticket increased to $90.01 from $88.90 during the same time last year.

These measures do not include outcomes from the acquisitions of HD Supply and SRS. In the same time frame, Home Depot’s stock finished at $394.70, up only 1.5% so far this year, underperforming the S&P 500’s rise of about 10%.

Q2 revenue for Home Depot was $45.27 billion, which was somewhat less than the $45.41 billion forecast. The adjusted profits per share fell short of the anticipated $4.72 to $4.68.

For the second consecutive year, the business reaffirmed its annual estimate, predicting a 2.8% growth in net sales and a 1% gain in same-store sales over the course of the fiscal year. In the first half, the momentum persisted since clients were working on smaller home renovation projects.

“This is recognized and priced into the stock, even though the turn’s magnitude is not spectacular,” Gutman wrote. With a price objective of 450, DA Davidson analysts maintained their buy recommendation on Home Depot as of early Tuesday. Although the Q2 comparative sales for the S&P 500 component were “about in line,” the company said on Tuesday that the trends “improved greatly” throughout the course of the quarter.

The buy rating for Home Depot’s shares has been maintained, with a target price of $432, up from $425. Q2 indicators have been “mixed,” according to the experts, although there has been enthusiasm around lowering interest rates.

S&P 500: It’s All About Jackson Hole

Markets anticipate that Federal Reserve Chairman Jerome Powell will confirm market expectations for a potential Fed rate decrease in September at his annual Jackson Hole address, which is anticipated to signify significant policy changes.

A rate decrease is now around 83% likely at the Fed’s September 17 meeting, down from a near lock before this week’s strong inflation and economic statistics. Cuts were expected to reach between 80% and 90% during the Fed’s October and December meetings.

Investors may follow the IBD Sector Leaders list, the IBD Swing Trader, the IBD 50 list of outstanding growth companies, and the Leaderboard. The stock of Home Depot has a 63 Composite Rating, whilst the stock of the S&P 500 has a 49 Relative Strength Rating and a 63 EPS Rating. Currently, Home Depot’s stock holds a composite rating of 63 out of a potential 99.

Conclusion:

Home Depot is well positioned for future development. Despite tariff worries ad lower demand for bigger projects, analysts maintain their buy recommendation with price targets over $430. As interest rates fall and consumer spending habits change, Home Depot remains a key company in the home improvement and retail sectors for investors.