Home improvement retail giant Home Depot (NYSE: HD) met Wall Street’s revenue expectations in Q2 CY2025, with sales up 4.9% year on year to $45.28 billion. Its non-GAAP profit of $4.68 per share was in line with analysts’ consensus estimates.

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StockStory’s Take

Home Depot’s second quarter results were well received by the market, as the company delivered steady growth in same-store sales and maintained profitability in line with Wall Street’s expectations. Management attributed the positive momentum to robust engagement across both professional and do-it-yourself customers, with particular strength in categories such as lumber, hardware, and seasonal goods. CEO Ted Decker noted, “The performance across the business was the strongest we’ve seen in over two years,” highlighting investments in technology, supply chain, and the pro ecosystem as meaningful contributors to recent performance.

Looking ahead, Home Depot’s forward outlook is shaped by ongoing investments in its pro ecosystem, integration of recent acquisitions, and enhancements to customer experience through technology. Management believes that continued economic uncertainty and elevated interest rates may weigh on large discretionary projects, but expects steady demand for smaller home improvement jobs. CFO Richard McPhail emphasized, “Our guidance does not assume any improvement in the outlook for larger projects or a turn in housing per se. It really just assumes that consistent momentum that we’ve already seen continues.”

Key Insights from Management’s Remarks

Management pointed to broad-based category gains, digital platform growth, and early benefits from recent acquisitions as key drivers behind the quarter’s steady results and outlook.

• Pro ecosystem expansion: The company’s ongoing focus on its pro customer base, including trade credit, dedicated sales teams, and enhanced delivery capabilities, continues to drive engagement and incremental sales, particularly in complex project categories.
• Acquisition integration: The SRS acquisition exceeded expectations, delivering revenue synergies and market-leading growth. The pending GMS acquisition is expected to add complementary building product categories and expand Home Depot’s distribution footprint.
• Technology and fulfillment investments: Investments in machine learning and logistics optimization have improved delivery speeds and customer satisfaction, leading to a double-digit lift in spend among customers using faster delivery options.
• Digital sales momentum: Online sales grew approximately 12% year-over-year, with enhanced search, AI-driven recommendations, and improved “buy-it-again” features contributing to higher engagement and repeat purchases.
• Category breadth: Positive comps in 12 of 16 merchandising departments, including notable gains in storage, building materials, and power tools, supported the most balanced performance in over two years.

Drivers of Future Performance

Home Depot’s future performance will depend on pro customer engagement, integration of acquisitions, and the broader economic environment’s effect on home improvement demand.

• Pro ecosystem and complex projects: Management expects continued growth from pros working on complex projects, supported by trade credit, expanded order management, and improved delivery reliability. However, recovery in large discretionary projects is not assumed in current guidance.
• Acquisition impact: The pending GMS acquisition is anticipated to broaden product offerings and distribution reach, enabling cross-selling and deeper penetration into the specialty trade segment, though integration risks remain.
• Macroeconomic sensitivity: Elevated mortgage rates and economic uncertainty are expected to constrain larger renovation projects, while steady employment and home equity may support ongoing demand for smaller projects. Management is watching for potential tailwinds from lower interest rates or tax changes.

Catalysts in Upcoming Quarters

In coming quarters, the StockStory team will be closely watching (1) the pace of integration and performance from the SRS and pending GMS acquisitions, (2) ongoing expansion of the pro ecosystem and adoption of new trade credit and order management features, and (3) signs of recovery or continued deferral in larger discretionary home improvement projects. We also see digital sales growth and delivery enhancements as important markers for execution.

Home Depot currently trades at $407.29, up from $394.52 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).

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