For the sixth straight quarter, Home Depot (HD +0.48%) squeezed out positive U.S. same-store sales when it reported its fiscal first-quarter results on May 19. That follows a period in which the company saw its U.S. same-store sales decline for eight consecutive quarters. In a bit of irony, the stock held up very well during this tough sales stretch, but more recently, the share price is down nearly 30% from its highs despite turning the corner on the sales front.
Let's take a closer look at the home improvement retailer's fiscal Q1 report and prospects to see if now is a good time to buy the stock.
NYSE: HD
Key Data Points
Same-store sales continue to edge higher
Home Depot saw its global comparable-store sales edge up 0.6% higher in fiscal Q1, marking its fourth straight quarter of positive growth. Meanwhile, U.S. same-store sales growth increased by 0.4%. While it hasn't seen robust growth over the past year, it's been a steady improvement compared to the prior two years, as seen in the table below.
|
Quarter/Year |
Same-Store Sales Growth (Decline) |
U.S. Same-Store Sales Growth (Decline) |
|---|---|---|
|
Q3 2022 |
4.3% |
4.5% |
|
Q4 2022 |
(0.3%) |
(0.3%) |
|
Q1 2023 |
(4.5%) |
(4.6%) |
|
Q2 2023 |
(2%) |
(0.2%) |
|
Q3 2023 |
(3.1%) |
(3.5%) |
|
Q4 2023 |
(3.5%) |
(4%) |
|
Q1 2024 |
(2.8%) |
(3.2%) |
|
Q2 2024 |
(3.3%) |
(3.6%) |
|
Q3 2024 |
(1.3%) |
(1.2%) |
|
Q4 2024 |
0.8% |
1.3% |
|
Q1 2025 |
(0.3%) |
0.2% |
|
Q2 2025 |
1% |
1.4% |
|
Q3 2025 |
0.2% |
0.1% |
|
Q4 2025 |
0.4% |
0.3% |
|
Q1 2026 |
0.6% |
0.4% |
Data source: Home Depot earnings reports. Home Depot's fiscal quarters end approximately one month after standard calendar quarters. Table by author.
The same-store sales growth in Q1 was led by a 2.2% increase in average ticket size, while transactions declined by 1.3%. Big-ticket items, which the company defines as those costing $1,000 or more, rose 0.8%, while pro sales outperformed do-it-yourself buyers. Overall, nine of Home Depot's 16 product categories recorded positive same-store sales growth.
Home Depot's total revenue increased by 4.8% year over year to $41.77 billion, while adjusted earnings per share (EPS) fell 4% to $3.43. These results topped the analyst consensus, which called for EPS of $3.41 on $41.52 billion in sales, according to data compiled by LSEG.
Looking ahead, Home Depot maintained its full-year guidance for revenue to increase from 2.5% to 4.5%. It is looking for same-store sales to be flat to up 2% for the year.
Image source: The Motley Fool.
Can the stock rally?
Home Depot has been facing industry headwinds for quite some time. A pull-forward in demand from the pandemic, coupled with higher interest rates and less housing turnover, has created a tough environment. However, the home improvement retailer is posting solid results and maintaining its guidance amid a strapped consumer facing high gas prices, which suggests the industry is stabilizing.
With the sell-off in its stock over the past year, Home Depot now trades at a forward price-to-earnings (P/E) ratio of about 20.5 times fiscal 2026 analyst estimates, its most attractive valuation in years. With same-store sales still positive and the stock trading at a compelling valuation, I think investors can start to accumulate shares in this blue chip.
