Home Depot (HD) Stock Forecast & Price Target

Home Depot is benefiting from a gradual rebound in demand, with U.S. comps accelerating to 1.3% and July U.S. comp growth of 2.2%, while big-ticket transactions over $1,000 rose 2.4%, signaling improving customer engagement despite housing still being subdued. Its positive outlook is also supported by share gains in a fragmented Pro market, where SRS and other acquisitions expand reach into roofing, pools, landscaping, and MRO, while digital sales grew 11% and in-stock levels improved. Financially, the company posted 2Q adjusted EPS of $4.92, gross margin of 33.7%, and adjusted debt/EBITDAR of 2.3x, showing strong earnings quality and balance-sheet flexibility even as margins face some pressure.

Home Depot is facing a tougher fundamental setup as tariff refunds temporarily masked about 60 bps of supply chain and acquisition-related gross margin pressure, while management now expects 3Q gross margins to be down 50 to 60 bps before flattening in 4Q. The company is also exposed to an unfavorable industry backdrop, with elevated interest rates, housing affordability concerns, and historical lows in housing turnover dampening demand for larger discretionary projects and risking slower comp growth. Although 2Q benefits from share gains, Canada, Mexico, and SRS helped, the $5.5B GMS acquisition and other wholesale expansion add lower-margin mix pressure, while consumer surveys and LIRA point to cooling remodeling activity.