The Home Depot (HD) reported third-quarter 2026 results that sparked mixed reactions on Wall Street, with analysts split on the company’s near-term trajectory despite strong revenue performance. The stock reacted erratically, reflecting uncertainty over future margin pressures and consumer spending trends.
- Q3 2026 revenue: $34.2 billion, up 5.3% YoY
- Adjusted EPS: $3.42 vs. expected $3.47
- Gross profit margin: 36.7%, down from 37.9% in Q3 2025
- Inventory levels up 12% year-over-year
- Q4 2026 EPS guidance: $3.40–$3.50
- Stock traded at 22.8x P/E, with $4.6B in buybacks
The Home Depot (HD) posted Q3 2026 revenue of $34.2 billion, a 5.3% year-over-year increase, driven by a 4.1% rise in comparable store sales. Gross profit margin dipped to 36.7% from 37.9% in the same quarter last year, signaling ongoing inflationary pressures on procurement and logistics. The company reported net income of $3.9 billion, up 3.2% from $3.78 billion in Q3 2025, but adjusted EPS of $3.42 missed the consensus estimate of $3.47 by 1.4%. Analyst sentiment diverged sharply following the release. Eight firms upgraded HD to 'Buy' or 'Outperform,' citing resilient demand in the home improvement sector and strong execution in supply chain optimization. Conversely, six firms downgraded the stock to 'Hold' or 'Underperform,' citing elevated inventory levels—up 12% compared to Q3 2025—and concerns over a potential slowdown in DIY consumer spending during the holiday season. The stock closed the day 2.1% lower at $378.45, erasing gains made earlier in the week. Market participants remain focused on the company’s guidance for Q4 2026, which forecasts revenue growth of 4.0% to 4.5% and adjusted EPS of $3.40 to $3.50. Wall Street is particularly attentive to the company’s capital allocation strategy, with $4.6 billion allocated to share buybacks and $1.2 billion to dividends in the quarter. Retail analysts note that the stock remains undervalued relative to its historical P/E ratio, currently trading at 22.8x, despite the short-term turbulence. Investment managers with long-term mandates continue to view HD as a defensive play in a volatile macro environment, especially given its dominant 26% U.S. market share in home improvement.