GMS acquisition drives net sales
The GMS acquisition, completed September 4, 2025, contributed $1.4 billion of incremental net sales during Q2 FY2026, the primary driver of the 5.7% net sales increase.
Source: 10-Q Item 2 MD&A
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AI Takeaway
Home Depot's fiscal second quarter of 2026 was defined by the contribution from the GMS acquisition and resilient comparable sales, but also by expense growth that outpaced sales. Management cited the GMS acquisition as the primary driver of the net sales increase, contributing $1.4 billion of incremental sales during the quarter, alongside a 1.7% comparable sales increase. The tension was on the cost side: SG&A rose 8.5%, faster than revenue growth, and operating margin dipped slightly. Gross margin benefited from IEEPA tariff refunds, helping offset fuel, energy, and other product input cost pressures. The company continues to pause share repurchases as it prioritizes debt reduction.
Revenue
$47.86B
+5.71% YoY
EPS (Diluted)
$4.79
+4.59% YoY
Gross Margin
33.7%
+0.3 pts YoY
Operating Income
$6.84B
+4.33% YoY
Source: SEC XBRL
Home Depot (HD) reported Q2 FY2026 revenue of $47.86B, up 5.7% year over year. Operating margin was 14.3%, down 0.2 points from 14.5% a year earlier. HD's fiscal Q2 FY2026 corresponds to calendar Q3 2026.
Last 4 quarters: 2 beats
| Quarter | Actual EPS (USD) | Consensus (USD) | Result |
|---|---|---|---|
| Sep 2026 | 4.92 | 4.88 | Beat +0.9% |
| Jun 2026 | 3.43 | 3.51 | Miss -2.2% |
| Mar 2026 | 2.72 | 2.62 | Beat +4.0% |
| Dec 2025 | 3.74 | 3.95 | Miss -5.4% |
Compiled by AI from 10-Q Item 2 of this filing
The GMS acquisition, completed September 4, 2025, contributed $1.4 billion of incremental net sales during Q2 FY2026, the primary driver of the 5.7% net sales increase.
Source: 10-Q Item 2 MD&A
Home Depot received approximately $730 million in IEEPA tariff refunds during the quarter, with about $685 million recognized as a reduction of cost of goods sold; interest received on refunds was recognized in interest income.
Source: 10-Q Item 2 MD&A
Comparable sales rose 1.7%, reflecting a 2.8% increase in average ticket, partially offset by a 1.0% decline in comparable transactions; online sales grew 11.0% and represented 16.6% of net sales.
Source: 10-Q Item 2 MD&A
The company remains paused on share repurchases with no plans to resume in fiscal 2026, increased its quarterly dividend 1.3% to $2.33 per share, and invested $1.7 billion in capital expenditures during the first six months.
Source: 10-Q Item 2 MD&A
Compiled by AI from 10-Q Item 2 of this filing · 2 high, 3 medium, 0 low
The filing notes ongoing tariff and other trade policy developments, including IEEPA litigation and additional tariffs, and states the ultimate impact on future results and cash flows cannot be predicted. Refunds have been received, but future tariff changes could materially affect costs and margins.
Source: 10-Q Item 2 MD&A
Management cites consumer uncertainty and housing affordability pressure as headwinds to home improvement demand. Comparable customer transactions declined, although average ticket growth supported comparable sales.
Source: 10-Q Item 2 MD&A
Fuel, energy, and other product input costs, along with higher SG&A, are pressuring profitability. SG&A grew faster than net sales, contributing to a lower operating margin.
Source: 10-Q Item 2 MD&A
The integration of GMS, Mingledorffs, and SRS adds complexity and could affect operations. Current results include contributions from these acquisitions, and future performance may depend on successful integration.
Source: 10-Q Item 2 MD&A
Cash and equivalents declined to $2.1 billion, and the company paused share repurchases to reduce outstanding debt. With a high debt-to-equity ratio and reliance on commercial paper, liquidity and debt service remain key concerns.
Source: 10-Q Item 2 MD&A
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue $B | 47.86 $B | 45.28 $B | +5.71% |
Cost of Revenue $B | 31.75 $B | 30.15 $B | +5.29% |
Gross Profit $B | 16.12 $B | 15.13 $B | +6.55% |
Operating Income $B | 6.84 $B | 6.56 $B | +4.33% |
Net Income $B | 4.77 $B | 4.55 $B | +4.72% |
EPS (Basic) $ | 4.79 $ | 4.59 $ | +4.36% |
EPS (Diluted) $ | 4.79 $ | 4.58 $ | +4.59% |
SG&A Expense $B | 8.42 $B | 7.76 $B | +8.50% |
Answers draw on this SEC filing and the data on this page
HD delivered 4.8% revenue growth to $41.8B in Q1 FY2026, aided by the GMS acquisition, but gross and operating margin compression drove net income and diluted EPS down 4.2% and 4.3%, respectively. Source: 10-Q Item 2 MD&A, pp.15-16
Home Depot (HD) delivered FY2025 revenue growth of 3.2% to $164.7B, but profitability declined as SG&A costs surged 6.8% and net income fell 4.4% to $14.2B, reflecting margin pressure and higher operating expenses following its acquisition activity.
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