Home Depot (NYSE:HD) Posts Better-Than-Expected Sales In Q1

Adam Hejl

Tue, May 20, 2025, 4:11 AM 5 min read

Revenue: $39.86 billion vs analyst estimates of $39.24 billion (9.4% year-on-year growth, 1.6% beat)
Adjusted EPS: $3.56 vs analyst expectations of $3.59 (0.8% miss)
Reaffirmed fiscal 2025 guidance (2.8% sales growth, 2% decline in adjusted EPS)
Operating Margin: 12.9%, down from 13.9% in the same quarter last year
Free Cash Flow Margin: 8.8%, down from 12.8% in the same quarter last year
Locations: 2,350 at quarter end, up from 2,337 in the same quarter last year
Same-Store Sales were essentially flat, decreasing 0.3% year on year (-2.8% in the same quarter last year)
Market Capitalization: $377.1 billion

"Our first quarter results were in line with our expectations as we saw continued customer engagement across smaller projects and in our spring events," said Ted Decker, chair, president and CEO.

Company Overview

Founded and headquartered in Atlanta, Georgia, Home Depot (NYSE:HD) is a home improvement retailer that sells everything from tools to building materials to appliances.

Sales Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years.

With $163 billion in revenue over the past 12 months, Home Depot is a behemoth in the consumer retail sector and benefits from economies of scale, giving it an edge in distribution. This also enables it to gain more leverage on its fixed costs than smaller competitors and the flexibility to offer lower prices. However, its scale is a double-edged sword because there are only a finite number of places to build new stores, making it harder to find incremental growth. To expand meaningfully, Home Depot likely needs to tweak its prices or enter new markets.

As you can see below, Home Depot’s sales grew at a tepid 6.8% compounded annual growth rate over the last six years (we compare to 2019 to normalize for COVID-19 impacts) as it didn’t open many new stores.

This quarter, Home Depot reported year-on-year revenue growth of 9.4%, and its $39.86 billion of revenue exceeded Wall Street’s estimates by 1.6%.

Looking ahead, sell-side analysts expect revenue to grow 1.5% over the next 12 months, a deceleration versus the last six years. This projection doesn't excite us and suggests its products will face some demand challenges.

Today’s young investors likely haven’t read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.

Store Performance

Number of Stores

Home Depot operated 2,350 locations in the latest quarter, and over the last two years, has kept its store count flat while other consumer retail businesses have opted for growth.

When a retailer keeps its store footprint steady, it usually means demand is stable and it’s focusing on operational efficiency to increase profitability.

Same-Store Sales

A company's store base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales is an industry measure of whether revenue is growing at those existing stores and is driven by customer visits (often called traffic) and the average spending per customer (ticket).

Home Depot’s demand has been shrinking over the last two years as its same-store sales have averaged 1.9% annual declines. This performance isn’t ideal, and we’d be concerned if Home Depot starts opening new stores to artificially boost revenue growth.

In the latest quarter, Home Depot’s year on year same-store sales were essentially flat, decreasing 0.3% year-on-year. This performance was a well-appreciated turnaround from its historical levels, showing the business is improving.

Key Takeaways from Home Depot’s Q1 Results

It was encouraging to see Home Depot beat analysts’ revenue expectations this quarter. On the other hand, its EBITDA slightly missed. Zooming out, we think this was a mixed quarter. The stock traded up 1.8% to $386 immediately after reporting.

Should you buy the stock or not? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.

Terms and Privacy Policy

Your Privacy Choices

Utah Privacy Notice

More Info