Level 1 — Absolute Beginner

Home Depot is a very big shop in America. It sells tools, wood and things for the home and garden.

Today the company shared its results for the first three months of the year. The shop made about $41.6 billion in sales. That is a lot of money!

But the profit was smaller than last year. This is because many people in America cannot pay for big home projects right now.

Builders, called Pro customers, are buying more from Home Depot. Normal home owners, called DIY customers, are buying a little less.

shop

a place where you can buy things

sell

to give something to a person in exchange for money

tools

objects like hammers and screwdrivers that help people do work

garden

the piece of land around a house, often with plants and flowers

company

a business that makes or sells things

billion

the number 1,000,000,000 — a thousand millions

profit

the money a company keeps after it pays for everything it needs

builder

a person whose job is to make houses or other buildings

Level 2 — Elementary

Home Depot, the largest home-improvement retailer in the United States, published its first-quarter 2026 results before the stock market opened on Tuesday, May 19. The company reported net sales of about $41.6 billion, which is 4.4% higher than the same period last year.

However, earnings per share — the profit divided by the number of shares — slipped to about $3.41, a 4.2% drop from a year ago. Wall Street analysts had expected roughly the same numbers, so the report contained few big surprises, but it confirmed that the U.S. housing market is still being held back by high mortgage interest rates.

The chain divides its customers into two main groups. 'Pro' customers are contractors, plumbers, painters and other building tradespeople who buy in large quantities. 'DIY' customers are ordinary homeowners doing small repairs themselves. In the past quarter, Pro sales grew faster than DIY sales for the second time in a row, a trend that the company highlighted in its January update.

Home Depot stock, traded under the ticker HD on the New York Stock Exchange, has fallen more than 21% over the last twelve months as worries about consumer spending have grown. Investors will be listening carefully to the 9 a.m. Eastern earnings call, where CEO Ted Decker and CFO Richard McPhail are expected to discuss whether the company will change its forecast for the rest of the year.

retailer

a company that sells products directly to ordinary shoppers, rather than to other businesses

fiscal year

the twelve-month period a company uses for accounting, which may or may not match the normal calendar year

earnings per share (EPS)

the company's net profit divided by the total number of shares of stock — a key measure of profitability

Wall Street analyst

a financial expert at a brokerage or bank who studies a company and publishes a forecast for its results

mortgage

a loan used to buy a house or other property, paid back over many years

contractor

a builder or company that is hired to do a specific construction or repair job

ticker

the short letter code by which a stock is identified on an exchange, such as HD for Home Depot

guidance

a company's own public forecast of how its sales or profits will perform in the months ahead

Level 3 — Intermediate

Home Depot, the largest home-improvement retailer in the United States by revenue, reported its fiscal first-quarter 2026 results before the opening bell on Tuesday, May 19, posting net sales of approximately $41.6 billion, up 4.4% year-on-year, against a Wall Street consensus that had been broadly in line. Comparable-store sales — the closely watched 'comps' figure that strips out the effect of new and closed stores — were modestly positive, with U.S. comps slightly outperforming the consolidated number.

Diluted earnings per share, however, slipped 4.2% year-on-year to roughly $3.41, reflecting both ongoing gross-margin pressure from a heavier Pro-customer sales mix — Pro orders skew toward lumber, plywood, drywall and other lower-margin commodity categories — and elevated interest expense on the company's substantial post-pandemic debt stack. The combination of a top-line beat and a bottom-line miss is the textbook signature of a retailer working through a high-rate, low-housing-turnover macro backdrop.

Management has been preparing investors for exactly this Pro-versus-DIY divergence for several quarters. At the January Q4 update, CFO Richard McPhail flagged that Pro comparable-store sales had turned positive and were outperforming DIY for the first time since 2021, as Pro buyers — whose order books track contractor backlogs and multi-family remodel pipelines — proved less rate-sensitive than the DIY customer, whose spending tracks household discretionary cash and consumer confidence. The May 19 print confirms that pattern for a second consecutive quarter.

HD stock has fallen roughly 21% over the trailing twelve months heading into the print, sharply underperforming the broader S&P 500 and lagging the consumer-discretionary sector as a whole. The 9 a.m. Eastern earnings call with CEO Ted Decker and CFO Richard McPhail is being scrutinised for any revision to fiscal-2026 guidance — particularly on comparable-store sales, gross-margin rate and the timing of any inflection in the DIY customer — as well as for commentary on the company's roughly $18 billion in long-term debt and ongoing share-buyback cadence.

comparable-store sales

the year-on-year change in sales at stores that have been open for at least a full year, used as a key like-for-like performance measure

diluted earnings per share

the company's net profit divided by the total share count assuming all options, warrants and convertible securities have been exercised

gross margin

the share of revenue left after paying the direct cost of the goods sold, before overhead, interest and tax

top-line beat

a quarterly result in which a company's revenue exceeds the Wall Street consensus estimate

bottom-line miss

a quarterly result in which a company's net profit or earnings per share falls short of the Wall Street consensus estimate

Level 4 — Advanced

The Home Depot Inc., the United States' largest home-improvement retailer by both revenue and footprint, opened its fiscal first-quarter 2026 reporting cycle before the New York opening bell on Tuesday, May 19, posting net sales of approximately $41.6 billion against a Wall Street consensus that had been broadly in line, a year-on-year top-line increment of roughly 4.4% over the $39.9 billion booked in Q1 2025. Diluted earnings per share, however, slipped 4.2% year-on-year to roughly $3.41, materialising the textbook signature of a top-line beat coupled with a modest bottom-line miss that is increasingly characteristic of large-cap U.S. retailers operating through a higher-for-longer rate regime.

Comparable-store sales were modestly positive on the consolidated number, with U.S. comps slightly outperforming the consolidated figure once the foreign-exchange-translated Mexico and Canada banners are stripped out. Within the comp, traffic and average ticket pulled in opposite directions: ticket benefited from continued lumber, drywall and electrical-supply price firmness, while transaction count remained pressured by the structurally elevated 30-year fixed mortgage rate, which has hovered above the 6.5% threshold for the better part of three years and continues to depress existing-home sales-turnover volumes — the single most reliable real-time correlator with U.S. home-improvement category demand.

The Pro-versus-DIY divergence that CFO Richard McPhail surfaced at the February Q4 conference call has now extended to a second consecutive quarter of clear outperformance. Pro comparable-store sales — driven by the company's contractor-facing Pro Xtra loyalty programme, its trade-credit penetration, and the multi-billion-dollar acquisition of distribution platform SRS Distribution that closed in mid-2024 — printed in the low-single-digit positive range, while DIY comps remained marginally negative. The mix shift is structurally gross-margin-dilutive in the near term, since Pro orders skew toward lower-margin commodity categories such as framing lumber, plywood, drywall, fasteners and rebar, but it is medium-term margin-accretive once the SRS Distribution synergies and the company's separate trade-credit interest income are layered in.

HD shares have declined approximately 21% on a trailing-twelve-month basis heading into the print, sharply underperforming both the S&P 500 and the broader S&P 500 Consumer Discretionary sub-sector, and have de-rated from a peak forward P/E of roughly 25× last summer to roughly 18× at the print, near the post-pandemic trough of the multiple range. The 9:00 a.m. Eastern earnings call with CEO Ted Decker, CFO Richard McPhail, and the SRS Distribution integration lead is being scrutinised for any revision to fiscal-2026 guidance — particularly on the +1.0% comparable-store-sales bracket and the 33.4% gross-margin-rate point estimate — and for forward commentary on the company's roughly $18 billion long-term debt stack, the cadence of share buybacks under the $15 billion programme authorised in February, and the timing of any positive inflection in the DIY customer that would mark the macro turn investors have been waiting for since mid-2024.