Home Depot's stock turns lower as a sales miss offsets a 'mildly positive' outlook

By Tomi Kilgore Profit and total sales beat expectations, but comparable sales growth came up a bit shy Home Depot's stock falls as earnings beat expectations but comparable sales rose less than Wall Street expected. Shares of Home Depot rose turned lower in early trading Tuesday, after the home- improvement giant beat fiscal first-quarter profit and total sales expectations, but reported comparable sales that rose less than forecast. The company kept its full-year outlook intact, which was a relief for investors worried that higher gasoline prices resulting from the Iran war and a struggling housing market would lead to a more cautious outlook for customer spending. "The underlying demand in our business was relatively similar to what we saw throughout fiscal 2025, despite greater consumer uncertainty and housing affordability pressure," said CEO Ted Decker. The stock (HD) fell 0.7% in recent premarket trading, reversing an earlier gains of as much as 1.6% just minutes after earnings were released. The shares had gained 0.8% on Monday, after closing Friday at the lowest price since November 2023. For the quarter to May 4, comparable sales, or sales of stores open for more than a year, rose 0.6% from a year ago, the fourth-straight quarter of growth. But the results missed the average analyst estimate compiled by FactSet of 0.8% growth. Sales in U.S. stores increased 0.4%. Total sales rose 4.8% to $41.77 billion, above the FactSet consensus of $41.59 billion. The cost of sales rose 6% from a year ago, which reduced gross margin, a measure of how profitable sales are, to 33% from 33.8%. The company affirmed its full fiscal-year guidance for comparable sales growth of approximately flat to 2%, while the outlook for total sales growth was held steady at 2.5% to 4.5%. D.A. Davidson analyst Michael Baker said the reiterated guidance was perhaps "mildly positive," in that the pressure on consumers associated with the continuation of the Iran war "could have led to a downtick." Net income for the first quarter fell 4.2% from a year ago to $3.29 billion, while adjusted earnings per share, which excludes nonrecurring items, slipped to $3.43 from $3.56, but beat analyst expectations of $3.41. The outlook for full-year adjusted EPS growth was kept at flat to 4%. The stock has dropped 12.9% in 2026 through Monday, while shares of rival Lowe's Companies (LOW) have lost 9.6% and the S&P 500 index SPX has gained 8.1%. -Tomi Kilgore This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal. (END) Dow Jones Newswires 05-19-26 0859ET