Home Depot set to report modest sales gains for Q3

Home Depot is projected to report modest Q3 earnings, with Bank of America anticipating a 1.3% comparable store sales increase and Wall Street analysts expecting 2.1% revenue growth to $41 billion and EPS of $3.82. Sales momentum was stronger in August but slowed in October due to tougher prior-year comparisons, though a slight sequential improvement is forecast for the second half. The recent $5.5 billion acquisition of GMS, which adds a fourth vertical for professional customers, is highlighted as a significant growth opportunity, particularly in expanding trade credit. Bank of America maintains a 'Buy' rating and $450 price target, citing continued share gains through accelerated growth within the Pro segment despite macroeconomic uncertainty.

Analysis

Home Depot is anticipated to report modest third-quarter results, with Bank of America projecting a 1.3% increase in comparable store sales, slightly above Q2's 1%. This aligns with Bloomberg credit and debit card data showing a 1.6% sales increase in fiscal Q3, driven by an improved average transaction value. Wall Street analysts forecast Q3 revenue to grow 2.1% year-over-year to $41 billion, with EPS reaching $3.82.

Sales momentum was stronger in August but decelerated in October, primarily due to challenging comparisons from last year's hurricane-related boost. Despite this, analysts expect a slight sequential improvement in the second half of the year, supported by favorable currency comparisons and modest price increases designed to offset tariffs. Fiscal 2026/calendar 2025 guidance also assumes this sequential comp improvement from the 0.9% reported in H1.

The recent $5.5 billion acquisition of GMS, completed in September, strategically expands Home Depot's professional customer segment into drywall, steel framing, and ceilings. While not impacting Q3 comps, this acquisition presents a significant long-term growth opportunity, particularly through the expansion of trade credit and order management capabilities for the vast Pro customer base. Bank of America maintains a 'Buy' rating and a $450 price target, citing expected continued share gains and accelerated growth within the Pro segment.

Key Decisions for Investors

• Monitor Home Depot's Q3 earnings release on November 18 for confirmation of modest comparable sales growth and revenue targets, paying close attention to any updated guidance for H2 and fiscal 2026.
• Evaluate the long-term strategic benefits of the GMS acquisition, particularly its potential to accelerate growth in the professional customer segment and expand trade credit offerings, which could drive future revenue streams.
• Consider the Bank of America's 'Buy' rating and $450 price target, assessing whether the current share price of $363 offers an attractive entry point given the positive outlook on Pro segment expansion and expected share gains.