AI Takeaway
Home Depot delivered Q2 FY2026 revenue of $41.8B (+4.8% YoY), but profitability compressed with net income falling 4.2% to $3.3B as cost pressures and higher SG&A weighed on margins, while operating cash flow surged 39.5% to $6.0B.
Revenue
$41.77B
++4.79% YoY
EPS (Basic)
$3.31
-4.34% YoY
Gross Margin
33.0%
-0.77% YoY
Operating Income
$4.98B
-2.96% YoY
Filed · Source: SEC EDGAR 10-Q filing
Net sales grew 4.8% YoY to $41.8B in Q2 FY2026, up from $39.9B in the prior-year period, suggesting continued demand for home improvement products and services despite a challenging macro backdrop.
Source: Source: 10-Q Income Statement (XBRL Financial Data)
Gross margin declined approximately 77 basis points YoY to 33.0% (from 33.8%), as cost of revenue grew faster than sales at +6.0% vs. +4.8%. SG&A expenses also rose 5.7% YoY to $8.0B, contributing to operating margin contraction of roughly 95 bps to 11.9%.
Source: Source: 10-Q Income Statement & Key Ratios (XBRL Financial Data)
Operating income fell 3.0% YoY to $5.0B and net income dropped 4.2% to $3.3B, indicating that cost inflation and higher operating expenses are outpacing top-line growth and pressuring the bottom line.
Source: Source: 10-Q Income Statement (XBRL Financial Data)
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Upgrade to unlockCost of revenue grew 6.0% YoY — faster than the 4.8% revenue growth — compressing gross margin by ~77 bps to 33.0%. If input cost pressures (e.g., tariffs, supply chain costs, labor) persist, further margin deterioration is likely. SG&A also rose 5.7%, adding additional pressure on operating profitability.
Source: Source: 10-Q Income Statement & Key Ratios (XBRL Financial Data)
Unlock 4 more detailed risk analysis
Upgrade to unlock| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $41.77B | $39.86B | +4.79% |
Cost of Revenue | $27.98B | $26.4B | +6.01% |
Gross Profit | $13.78B | $13.46B | +2.39% |
Operating Income | $4.98B | $5.13B | -2.96% |
Net Income | $3.29B | $3.43B | -4.19% |
EPS (Basic) | $3.31 | $3.46 | -4.34% |
EPS (Diluted) | $3.30 | $3.45 | -4.35% |
SG&A Expense | $7.96B | $7.53B | +5.70% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $107.9B | $99.16B | +8.82% |
Current Assets | $37.17B | $34.53B | +7.65% |
Total Liabilities | $94.03B | $91.2B | +3.10% |
Current Liabilities | $35.58B | $31.59B | +12.63% |
Stockholders' Equity | $13.87B | $7.96B | +74.41% |
Cash & Equivalents | $1.6B | $1.37B | +16.95% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $6.03B | $4.33B | +39.47% |
Investing Cash Flow | $-1.11B | $-931M | -19.12% |
Financing Cash Flow | $-4.71B | $-3.76B | -25.48% |
D&A | $910M | $855M | +6.43% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Gross Margin | 33.0% | 33.8% | -0.77% |
Operating Margin | 11.9% | 12.9% | -0.95% |
Net Margin | 7.9% | — | — |
ROE | 23.7% | — | — |
ROA | 3.0% | — | — |
Current Ratio | $1.045 | — | — |
Debt to Equity | $6.777 | — | — |
Other companies in Home Improvement Retail
Home Depot reported Q2 FY2026 revenue of $41.8B, up 4.8% YoY, but net income declined 4.2% to $3.3B as cost pressures weighed on margins. Diluted EPS came in at $3.30, down from $3.45 in the prior-year quarter.
HD's cost of revenue grew 6.0% YoY — faster than its 4.8% revenue growth — compressing gross margin to 33.0% from 33.8%. Additionally, SG&A expenses rose 5.7% to $8.0B, causing operating income to fall 3.0% and net income to drop 4.2% despite the top-line gain.
The headline story is a revenue beat at $41.8B (+4.8%) offset by margin compression and a 4.2% drop in net income to $3.3B. The bright spot was operating cash flow, which surged 39.5% YoY to $6.0B, highlighting the company's strong cash generation capabilities.
HD's balance sheet shows total assets of $107.9B and stockholders' equity of $13.9B, but the debt-to-equity ratio is elevated at 6.78x and the current ratio is a tight 1.04x, indicating significant leverage and limited short-term liquidity cushion. Operating cash flow of $6.0B provides a strong offset to these leverage concerns.
Based on the financial data, key risks include ongoing cost inflation (cost of revenue +6.0% YoY), elevated financial leverage (debt-to-equity of 6.78x), and a tight current ratio of 1.04x that limits liquidity flexibility. Sensitivity to housing market conditions and consumer spending cycles also remains a structural risk for the business.