Home Depot (HD) kicked off Fiscal 2025 with strong sales growth but fell short on the bottom line, as higher costs and tighter margins weighed on profits. Despite the earnings miss, the company reaffirmed its full-year outlook, signaling confidence in consumer demand heading into peak home improvement season. As of writing, shares have risen modestly in pre-market trading.
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First Quarter Highlights
Home Depot reported $39.9 billion in revenue, up 9.4% from last year’s period and ahead of analysts’ expectations. The bump in sales was driven by a healthy start to spring and continued demand for small-scale home projects. U.S. comparable sales inched up 0.2%, while total comparable sales dipped 0.3%, held back by international performance and currency headwinds.
On the earnings side, adjusted net income came in at $3.4 billion, or $3.56 per share, below Wall Street’s expectations of around $3.60 per share. GAAP earnings per share fell to $3.45, down from $3.63 a year ago.
While top-line performance was solid, earnings reflected pressure from higher interest expenses, foreign exchange, and continued investment in logistics and technology. Gross margin for the quarter stood at roughly 33.4%, and adjusted operating margin came in at 13.4%.
Still, CEO Ted Decker remained upbeat. “We saw continued customer engagement across smaller projects and feel great about our store readiness as spring breaks across the country,” he said.
Looking Ahead
Home Depot reaffirmed its Fiscal 2025 guidance, including 2.8% total sales growth and a 2% decline in adjusted EPS. The company plans to open 13 new stores and maintain disciplined capital spending, with capex projected at 2.5% of sales.
Bottom line: Home Depot’s Q1 showed resilient demand and solid execution, but it remains to be seen if margin pressures ease in the quarters ahead.
Is Home Depot Stock a Good Buy Right Now?
The Street’s analysts rate Home Depot as a Moderate Buy. The average HD stock price target is $426.72, implying a 12.48$ upside.
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