tapebrief
HD · Q1 2026

HD · Q2 2026 Earnings

Cautious

Home Depot (The)

Reported August 18, 2026

30-second summary

30-second take: Q2 revenue grew 5.7% to $47.86B with comparable sales +1.7% (U.S. +1.3%) — above the FY flat-to-+2.0% midpoint and a real acceleration off Q1's +0.6%. Q2 gross margin of 33.7% cleared the FY 33.1% guide by 60bps, and adjusted operating margin of 14.7% cleared the 12.8–13.0% FY range by ~170bps — precisely the seasonal cushion Q1's 12.3% miss required. Management reaffirmed every line of the FY2026 guide unchanged, which after the Q2 beat implies a materially softer H2, but the credibility risk that hung over the print after Q1's margin shortfall has been deferred. Transactions still -1.0% and the ticket lift (+2.8%) is still doing the work.

Headline numbers

EPS

Q2 FY2026

$4.92

Revenue

Q2 FY2026

$47.86B

+5.7% YoY

Gross margin

Q2 FY2026

33.7%

Operating margin

Q2 FY2026

14.3%

Key financials

Q2 FY2026
MetricQ2 FY2026Q2 FY2025YoYQ1 FY2026QoQ
Revenue$47.86B$45.28B+5.7%$41.80B+14.5%
EPS$4.92$4.68+5.1%$3.43+43.4%
Gross margin33.7%33.4%+30bps32.9%+80bps
Operating margin14.3%14.5%-20bps11.9%+240bps

Guidance

Company reaffirms entire FY2026 guidance package across all metrics; Q2 actuals showed strong operating margin expansion and above-guide comparable sales.

Guidance is issued for both next quarter and the full year. Both may appear below.

Reaffirmed unchanged this quarter: Total Sales Growth (approximately 2.5% to 4.5%), Comparable Sales Growth (approximately flat to 2.0%), Adjusted Diluted EPS Growth (approximately flat to 4.0% from $14.69), Gross Margin (approximately 33.1%), Operating Margin (approximately 12.4% to 12.6%), Adjusted Operating Margin (approximately 12.8% to 13.0%), New Store Openings (Approximately 15), Effective Tax Rate (approximately 24.3%), Net Interest Expense (approximately $2.3 billion), Capital Expenditures (approximately 2.5% of total sales), Diluted EPS (GAAP) (14.23 to 14.8)

Platform metrics

Q2 FY2026
SegmentQ2 FY2026Q2 FY2025YoY
Comparable Sales Growth1.7%——
Comparable Customer Transactions Growth-1.0%——
Comparable Average Ticket Growth2.8%——
Average Ticket$92.50$90.01—
Customer Transactions443.2 million446.8 million—

Profitability

Q2 FY2026
SegmentQ2 FY2026Q2 FY2025YoY
Operating Margin14.3%——
Adjusted Operating Margin14.7%——

Other KPIs

Q2 FY2026
SegmentQ2 FY2026
U.S. Comparable Sales Growth1.3%

Management tone

No transcript was available for this quarter; tone analysis is inferred from the press release language and the reaffirmation posture.

Narrative arc: Q3 FY2025 "consumer uncertainty disproportionately impacting demand" → Q4 FY2025 "no catalyst for inflection in housing activity" → Q1 FY2026 "underlying demand relatively similar to fiscal 2025" → Q2 FY2026 reaffirmation-with-beat, silent on inflection.

The IEEPA tariff refund line is the tell. The press release explicitly notes that guidance "includes IEEPA tariff refunds, which are expected to partially offset unplaced fuel, energy, and other product input costs throughout the fiscal year." This is the first quarter management has flagged a specific external cash inflow as a component of the guide. Reading against the reaffirmation posture, it suggests the H1 gross margin outperformance is partly refund-driven — a non-recurring plug that funds continued underlying cost pressure rather than genuine operating leverage. Management chose to reaffirm rather than raise, which implies the H2 base rate absent the refund is weaker than the H1 print suggests.

Reaffirming after a real beat is a different signal than reaffirming after a miss. Q1's reaffirmation after a margin miss required investors to believe a back-loaded recovery. Q2's reaffirmation after a margin beat requires investors to believe management sees offsetting H2 pressure they aren't quantifying. This is the same posture as Q2 FY2025 — where the prior brief flagged a ~140bps H2 step-down was in plain view and eventually surfaced as the Q3 FY2025 capitulation. The pattern is uncomfortably familiar: strong Q2 print, reaffirmed FY guide with visible cushion, no explicit acknowledgment of the implied H2 deleverage math.

Transactions still not inflected — the ticket dependence is now structural, not transitional. The tariff pricing tailwind was supposed to fade through H2. Q2 comp transactions at -1.0% and ticket at +2.8% (versus ~3% attributed to tariff-related pricing per Q1 disclosure) means either the tariff pricing is stickier than Bastic implied on the Q1 call, or mix-up is doing more of the work than any prior call has admitted. The seventh consecutive ticket-driven comp signals HD is not selling to more customers — it is selling more, or more premium, to fewer.

Answers to last quarter's watch list

Q2 adjusted operating margin vs. ~13.0% implied — Q2 adjusted operating margin printed 14.7%, materially above the ~13.0% implied bar. The FY guide risk that hung over the print after Q1's 50bps miss has been deferred. Q2 delivered the seasonal cushion the FY guide required.
Resolved positively
Q2 gross margin vs. 33.1% FY guide — Q2 gross margin came in at 33.7%, 60bps above the FY guide and 70bps above Q1. The GMS-annualization H1 gross margin pressure McPhail framed at the Q4 FY2025 call did not materialize as guided — either moderated organically, or offset by IEEPA tariff refunds.
Resolved positively
Comp transaction inflection or capitulation — Q2 comp transactions were -1.0%, modestly improved from Q1's -1.3% but still not positive. Tariff pricing was said by Bastic to be largely lapped by Q2, yet ticket remains +2.8% — meaning either the tariff pricing is stickier than disclosed or mix-up is heavier than acknowledged. The transactions did not inflect positive; the ticket did not fade as expected.
Continue monitoring
Big-ticket maintenance/repair vs. discretionary disclosure — The press release does not break out big-ticket >$1,000 into maintenance/repair vs. discretionary components. Without a transcript, no additional color was disclosed. The "discretionary remains under pressure" framing that has run for six consecutive quarters is now in a seventh quarter of unquantified vagueness.
Not resolved
SRS organic comp disclosure — No same-store SRS comp, SRS+GMS organic figure, or any framing that isolates organic HD-core performance appears in the press release. Consistent with every quarter since the acquisitions closed.
Not resolved
Mingledorf size and HVAC pipeline — Deal size was not disclosed in the press release. No new HVAC tuck-ins were announced. The Q2 10-Q may carry purchase price disclosure but is not addressed on the print.
Continue monitoring
Buyback resumption timeline — The press release makes no reference to share repurchase resumption or the H1 2027 timeline management previously telegraphed. Silence on a topic Decker held the line on last quarter under direct Q&A pressure is a soft signal.
Continue monitoring
Effective tax rate trajectory — Not disclosed in the press release headline metrics; the FY guide of ~24.3% was reaffirmed unchanged. The Q1 print of 24.9% has not been called out as trending materially wide.
Continue monitoring

What to watch into next quarter

Q3 adjusted operating margin vs. ~12.2% implied floor: With H1 adjusted operating margin at ~13.5%, Q3+Q4 needs to average roughly 12.2–12.4% for the FY 12.8–13.0% guide to hold at the low end. Q3 has historically been a solid margin quarter (13.3% in Q3 FY2025). Watch whether Q3 adjusted operating margin holds above 12.5% — a print below that would signal the H2 deleverage McPhail hinted at in FY2025 Q4 shape-of-year commentary is arriving on schedule, and Q4 would carry an even heavier lift.

Q3 gross margin vs. 33.1% FY guide and IEEPA refund magnitude: Q2 printed 33.7% partly on IEEPA refund inclusion. Watch the Q3 gross margin print against the 33.1% FY guide, and whether management quantifies the refund contribution in a footnote or Q&A. A Q3 gross margin below 33.0% with H1 at ~33.4% would confirm the H1 print was refund-boosted and organic gross margin is compressing on plan.

Q3 U.S. comp vs. Q1's +0.4% and Q2's +1.3%: Comp accelerated from Q1 to Q2; watch whether Q3 U.S. comp holds above +1.0%. A deceleration back toward flat with the ticket tailwind fading and tariff pricing lapped would repeat the Q3 FY2025 sequence (comp inflection from Q2 that reversed to +0.1% in Q3).

Transactions crossing to flat or positive: Q1 -1.3%, Q2 -1.0% — the direction is right, the level is not. Watch whether Q3 transactions print at -0.5% or better. Sustained -1% or worse with tariff pricing fully lapped means the +1.7% Q2 comp does not survive.

IEEPA tariff refund quantification: The Q2 press release flagged refunds as a component of the guide without sizing them. Watch the Q3 press release or 10-Q for either a quantified refund figure or a stronger qualitative characterization of magnitude. Silence would confirm the refunds are load-bearing and management does not want to isolate the underlying operating leverage.

The "softer engagement in larger discretionary projects" phrase: Now potentially in its seventh consecutive quarter. Watch whether Q3 commentary retires, softens, or repeats the phrase. Repetition alongside the +1.7% comp print would confirm the comp acceleration is entirely small-ticket / pro / mix — not big-ticket recovery.

SRS + GMS combined organic disclosure: With Mingledorf now integrated and cross-sell targeted to double next year per Q1 Q&A, watch whether Q3 introduces any same-store framing. Continued silence with acquisitions cycling into the comp base would obscure organic performance further.

Buyback resumption re-affirmation or slippage: Watch whether Q3 prepared remarks or Q&A explicitly reaffirm H1 2027 buyback resumption. Silence for a second consecutive quarter would be a meaningful soft pushout.

Sources

  1. Home Depot Q2 FY2026 Press Release, filed 2026-08-18 — https://www.sec.gov/Archives/edgar/data/354950/000035495026000145/hd_exhibit991x08022026.htm
  2. Home Depot Q1 FY2026, Q4 FY2025, Q3 FY2025, and Q2 FY2025 prior-brief context (Tapebrief archive) — for cross-quarter comp, margin, and guidance trajectory.

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