HD stock: Home Depot reaffirms 2025 guidance, sketches cautious 2026 path at Investor Day

Bassyonni

ago 2 hours

HD stock

Home Depot’s headline message to investors on December 9 was steadier-than-dramatic: the company reaffirmed its fiscal 2025 targets and offered a preliminary 2026 outlook that points to modest growth as housing and big-ticket spending remain sluggish. HD stock drifted lower around the event as traders weighed a “slow-mend” setup against hopes for a faster rebound.

HD stock reacts to Investor Day updates

With the Investor & Analyst Day kicking off at 8:30 a.m. ET, the stock’s initial move reflected a familiar tug-of-war: progress on margins and market share initiatives versus tempered expectations for next year. The company leaned into long-term share gains—especially with pros and project-driven customers—while acknowledging that near-term demand hinges on turnover in the housing market and the pace of larger project spend coming back.

For shareholders, the near-term read-through is straightforward: 2025 remains a reset year against a tough 53-week comparison, and 2026 is framed as a gentle inflection rather than a snap-back.

Home Depot guidance: 2025 reaffirmed, 2026 preliminary

Reaffirmed fiscal 2025 (52-week) guidance:

Total sales growth ~3%, with GMS expected to contribute about $2 billion in incremental sales.
Comparable sales slightly positive on a 52-week versus 52-week basis.
About 12 new stores for the year.
Gross margin around 33.2%; operating margin about 12.6%; adjusted operating margin about 13.0%.
Tax rate near 24.5%; net interest expense about $2.3 billion.
Diluted EPS down ~6% from $14.91 in fiscal 2024 (53 weeks); adjusted diluted EPS down ~5% from $15.24.
Capex roughly 2.5% of sales.

Preliminary fiscal 2026 outlook:

Home-improvement market range −1% to +1%.
Comparable sales flat to +2%.
Total sales growth ~2.5% to 4.5%.
Operating margin ~12.4% to 12.6%; adjusted operating margin ~12.8% to 13.0%.
Diluted EPS growth flat to +4%; same range for adjusted diluted EPS.

Management also outlined a market recovery case—a scenario in which housing activity and larger project spend reaccelerate—featuring ~5% to 6% sales growth, ~4% to 5% comp growth, and EPS growing mid-to-high single digits. That framing gives HD stock a clear catalyst path: any evidence of faster housing turnover or improving project intent could shift expectations toward the recovery case.

What today’s numbers signal for HD stock

The reaffirmed 2025 guide reinforces that this year is about operational blocking and tackling. The margin framework—33.2% gross and 12.6% operating (13.0% adjusted)—suggests pricing, mix, and productivity are holding up despite subdued big-ticket demand. On profit, the company still sees a year-over-year EPS decline versus a 53-week base, a reminder that calendar effects and financing costs (net interest of ~$2.3B) remain headwinds.

For 2026, the flat to slightly positive comp range is conservative but credible if housing transactions remain muted. Notably, the operating-margin corridor holds roughly steady while revenue edges higher, implying that merchandising, supply-chain efficiency, and pro-customer initiatives are doing more of the lifting. If comps land at the top end (+2%) and sales near +4.5%, EPS at the upper single-digit end of the implied range becomes achievable in the recovery scenario.

Key drivers to watch

Housing turnover and rates: A meaningful pickup in existing-home sales or mortgage activity would be the cleanest tailwind for project demand and big-ticket categories.
Pro customer momentum: Share gains with pros can offset DIY softness; watch any updates on order backlogs, ticket sizes, and attachment rates.
Mix and margin quality: Gross-margin durability at ~33% with stable promo levels would support the operating-margin guide even if comps stay near flat.
Capital allocation: With capex at ~2.5% of sales and steady free-cash generation, dividends and buybacks remain a valuation anchor; any changes would be notable for HD stock’s total-return profile.
Integration benefits: The contribution highlighted for incremental sales underscores the role of platform expansion; execution against those plans will be a focus.

Near-term setup for HD stock

In the very short run, the stock tends to react more to directional changes in the outlook than to reaffirmations. Today’s package leans conservative, which can weigh on multiples intraday. Over the next few quarters, however, the guardrails are clear: hold margins near the guided levels, keep comps in the flat-to-low-positive zone, and let any cyclical improvement in housing do the rest. If the macro breaks favorably, the company’s recovery case offers upside torque; if not, the 2026 baseline still sketches a path to low-single-digit EPS growth with disciplined investment.

For investors tracking HD stock, the takeaway is a classic “blocking-and-tackling now, optionality later” narrative—defensive enough for a slow patch, but positioned to accelerate when housing turns.