THE HOME DEPOT, INC. (HD) Pre-Earnings Brief

Q1: Does the company expect U.S. comparable sales growth to exceed 1.0% for fiscal 2026?

Why it matters: U.S. comp sales is a core same-store performance indicator reflecting underlying demand from both DIY and Pro customers in the largest market; sustained positive comps are critical to the investment thesis of market share gains and organic growth amid housing market headwinds.

Bull answer: Yes, management guides U.S. comp sales above 1.0% or highlights positive trends in ticket size and transactions driven by Pro strength and housing recovery signals.

Bear answer: No, guidance remains flat to low-single digit or commentary points to continued softness in DIY or regional weakness.

Q2: Will adjusted diluted EPS growth for fiscal 2026 exceed the high end of the current guidance range of 4.0%?

Why it matters: EPS is a primary valuation driver for HD given its mature business model; beating the upper end of guidance would signal better-than-expected margin execution and cost control, supporting a higher multiple on the stock.

Bull answer: Yes, management raises the EPS growth outlook above 4% citing gross margin expansion, SG&A leverage, or share repurchase benefits.

Bear answer: No, guidance is reiterated at flat to 4% or lowered due to margin pressure or slower sales.

Q3: Does management expect gross margin to expand beyond the guided 33.1% level for fiscal 2026?

Why it matters: Gross margin directly impacts operating leverage and profitability in a high-fixed-cost retail business; any expansion counters recent compression and reinforces the thesis of efficient sourcing and pricing power with Pro customers.

Bull answer: Yes, gross margin is expected to exceed 33.1% through better mix, supply chain efficiencies, or reduced promotional activity.

Bear answer: No, margin holds at or below 33.1% due to product cost inflation, mix shift to lower-margin Pro sales, or competitive pricing.

Q4: Will total sales growth for fiscal 2026 come in above the midpoint of the 2.5%-4.5% guidance range?

Why it matters: Total sales growth (including new stores and acquisitions like SRS/GMS) is key to validating the multi-year store expansion and Pro-focused M&A strategy as drivers of incremental revenue beyond comps.

Bull answer: Yes, management points to sales growth above 3.5% supported by new store openings, Pro segment momentum, or stronger housing market tailwinds.

Bear answer: No, growth is expected at or below the midpoint amid macro caution or slower Pro demand.

Q5: Does operating margin guidance for fiscal 2026 exceed 12.6%?

Why it matters: Operating margin reflects overall cost discipline and ability to leverage sales growth into profits; improvement here would counter recent declines and bolster the long-term thesis of high-ROIC retail operations.

Bull answer: Yes, operating margin is guided higher than 12.6% due to productivity initiatives, SG&A control, or volume leverage.

Bear answer: No, margin is flat or lower at/below 12.6% citing wage inflation, investments, or deleverage from soft sales.

Q6: Will Pro customer sales growth outpace total company sales growth by more than 2 percentage points in fiscal 2026?

Why it matters: The 'win with the Pro' strategy is central to HD's growth thesis amid a challenging DIY environment; outsized Pro performance validates investments in specialized capabilities, credit, and fulfillment.

Bull answer: Yes, Pro sales growth significantly exceeds total growth, with commentary on share gains in complex projects and benefits from SRS/GMS.

Bear answer: No, Pro growth is in line with or lags total sales, indicating limited traction from Pro initiatives.