Home Depot Keeps Cautious Forecast Despite Strong Second-Quarter Results

Home Depot posted better-than-expected second-quarter results but maintained its cautious forecast for comparable sales through fiscal 2026. According to UBS Securities, a global investment banking firm, the retailer's performance suggests it can outperform a slow home-improvement backdrop through execution, investment, and market-share gains.

Comparable sales at stores open at least a year rose 1.7%, above the 1.1% estimate, driven by both contractors and DIY shoppers focused on smaller repair jobs. However, the company reiterated its fiscal 2026 outlook of flat to 2% comparable-sales growth, which UBS called conservative given current trends.

UBS expects gross margin, the share left after product costs, to fall about 0.6 percentage points in Q3 as tariff-refund benefits fade and fuel and other expenses stay high, before stabilizing in Q4. This could pinch profitability in the third quarter, but UBS notes that stronger demand can coexist with tighter margin math.