To The Moon

$Home Depot(HD)$ is scheduled to report its fiscal fourth-quarter 2025 results on Tuesday, February 24, 2026, before the market opens.

The general sentiment heading into this report is cautious. While Home Depot has successfully integrated major acquisitions like GMS Inc. and SRS, the core business faces a "frozen" housing market and a lack of storm-related demand that typically drives emergency repairs.

Earnings Estimates & Context

Home Depot’s (HD) fiscal Q3 2025 earnings, reported in November 2024, provided a sobering look at a "stalling" retail environment. While the headline revenue figure looked healthy, the underlying data revealed a company leaning heavily on acquisitions to mask a soft core business.

Q3 2025 Financial Summary

The "Accounting Mask"

The 2.8% year-over-year revenue growth was largely driven by the GMS Inc. acquisition, which contributed roughly $900 million in the quarter. Without this, organic growth was essentially flat. The EPS miss was attributed to a lack of hurricane/storm activity—which usually drives emergency sales in Q3—and higher operating expenses related to integrating new businesses.

Key Lessons from the Guidance

The most important takeaway from the Q3 call wasn't the numbers, but the major recalibration of the full-year outlook. Here is what we learned:

1. The "Deferred Demand" Myth

For several quarters, management suggested that high interest rates were simply "deferring" projects. In Q3, they pivoted, acknowledging that an expected increase in demand did not materialize.

• Lesson: Home Depot admitted that consumer uncertainty is deeper than just "waiting for rate cuts." Even as rates began to stabilize, the "big-ticket" buyer remained on the sidelines.

2. The Shift to "Pro" is Defensive, Not Offensive

Management doubled down on their "Pro Ecosystem" (acquiring SRS and GMS).

• Lesson: HD is moving toward becoming a B2B wholesaler because the retail DIY consumer is exhausted. They are essentially buying market share through acquisitions to offset the organic decay in their retail stores.

3. Margin Compression is the New Normal

Despite the revenue beat, HD lowered its full-year EPS guidance to a 6% decline.

• Lesson: Integrating massive acquisitions like SRS and GMS is expensive. Investors learned that while these deals help the top line (sales), they weigh heavily on the bottom line (profit) due to interest expenses and transition costs.

The Takeaway for Q4

The Q3 report taught us that Home Depot is no longer a growth story; it is a "strategic digestion" story. The stock's performance now depends less on how many hammers they sell and more on how efficiently they can integrate their new professional-grade distribution networks.

Key Metrics to Watch

Investors should focus on these three areas to determine if HD is successfully navigating the current macro environment:

• Comparable Store Sales (Comps): This is the most critical health check. Management previously guided for "slightly positive" comps for the full year 2025. Analysts are looking for roughly +0.3%. Anything negative could signal that the DIY consumer is pulling back more than expected.

• Pro vs. DIY Performance: HD has heavily invested in its "Pro" ecosystem (AI tools like Blueprint Takeoffs). Watch for whether the Pro segment is offsetting the softness in DIY. If Pro growth stalls, it suggests that even professional contractors are seeing a thinning pipeline of projects.

• Big-Ticket Discretionary Spending: Management has flagged "discretionary project softness" (kitchen/bath remodels) due to high interest rates. Look for the "Average Ticket" size; if it drops significantly below $88–$89, it confirms that consumers are sticking only to essential maintenance.

Home Depot (HD) Price Target

Based on 34 analysts from Tiger Brokers app offering 12 month price targets for Home Depot in the last 3 months. The average price target is $400.17 with a high forecast of $450.00 and a low forecast of $295.00. The average price target represents a 5.70% change from the last price of $378.58.

Short-Term Trading Opportunities

Trading HD post-earnings is historically a coin toss, but current data suggests a few specific setups:

1. The "Conservative Guidance" Trap: HD often provides conservative outlooks. In February 2025, the stock fell despite a "beat" because the 2025 guidance was underwhelming. If HD issues a soft FY 2026 outlook (currently projected at 2.5%–4.5% sales growth), the stock may sell off even if the Q4 numbers are decent.

2. Historical Volatility: HD typically sees a median one-day move of around 2.2% post-earnings. However, it has declined 55% of the time following reports over the last five years.

3. The "Recovery Case" Play: If management highlights "green shoots" or mentions a "Market Recovery Case" (targeting 5-6% sales growth as housing thaws), the stock could see a relief rally, as it currently trades at a somewhat "pricey" P/E of 25x.

Trading Idea: Given that the stock has gained about 10–14% in the three months leading up to this report, much of the "stability" may already be priced in. A bearish put spread or iron condor might be safer than a directional long bet, as the stock is sitting near 52-week highs despite projected earnings declines.

Note: Options involve high risk. Ensure you check the "Implied Move" on the Friday before earnings to see if the market is over- or under-pricing the expected swing.

Technical Analysis - Exponential Moving Average (EMA)

HD is trading below the 26-EMA with a positive RSI momentum, investors are looking to see if HD could provide a strong guidance, which could trigger a “relief rally” setup, but if the guidance is flat, then we might see a “sell the news” due to its rich valuation.

Hence, it might be a better idea to play cautious for directional long bet, as the stock is sitting near 52-week highs despite projected earnings declines.

Summary

Home Depot (HD) is scheduled to report its fiscal Q4 2025 results on February 24, 2026. This report is critical as it wraps up a transition year defined by massive acquisitions and a stubborn housing market.

The Numbers to Beat

Wall Street expects a year-over-year decline in both the top and bottom lines, largely due to 2024 having an extra (53rd) week:

• Revenue: Estimated at $38.25 billion (down ~3.7% YoY).

• Adjusted EPS: Estimated at $2.51 – $2.52 (down ~19.5% YoY).

• Comparable Sales (Comps): Expected to be slightly positive at +0.3%.

What Investors Are Watching

1. The "Pro" Integration: With the $18 billion acquisition of SRS Distribution and the purchase of GMS Inc., HD has pivoted toward the professional contractor. Investors want to see if these acquisitions are providing organic growth or just acting as a "revenue band-aid" for falling DIY sales.

2. Housing Recovery Outlook: High mortgage rates have "frozen" the housing market. Management’s FY 2026 guidance will be the main event. In December, they hinted at a "Market Recovery Case" with 5–6% sales growth if housing thaws; any retreat from this optimism could spark a sell-off.

3. Big-Ticket Trends: Discretionary spend (kitchen/bath remodels) has been the weak link. If "average ticket" growth remains stagnant, it signals that the consumer is still only spending on essential "repair and maintain" items.

Short-Term Opportunity

HD's stock is currently trading at a forward P/E of ~25x, which is historically "pricey." Because the stock has recently underperformed rival Lowe’s, there is a "relief rally" setup if HD provides strong 2026 guidance. Conversely, if guidance is cautious (flat to 2% sales growth), the stock may pull back as investors "sell the news" on a rich valuation.

Appreciate if you could share your thoughts in the comment section whether you think HD could provide a strong guidance to trigger a “relief rally” setup.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.