The housing market is stuck. Mortgage rates have ripped higher again after the U.S.-Iran fight. Shopper confidence is in the basement.
Home Depot just beat Wall Street's numbers anyway.
The real story is not the beat. It is why CFO Richard McPhail keeps saying one phrase: "$700 billion pro market."
Home Depot's adjusted earnings per share landed at $3.43. That is just ahead of the $3.41 LSEG analysts called for. Revenue rose nearly 5% to $41.77 billion. That beat the $41.52 billion view.
Under the top-line numbers, the read gets shakier. Same-store sales rose just 0.6%. That is the cleanest read on whether stores are gaining or losing buyers.
It is the third straight quarter the comp number has moved less than half a percent. Comparable transactions, the cleanest read on store visits, dropped 1.3%. That is the fourth straight quarter of declines.
Gross margin came in at 33%. Wall Street had penciled in 33.2%. McPhail's read: the homeowner still shows up for small jobs. They keep pushing off the big projects.
That has been the pattern for two years. The Iran fight has not helped. Mortgage rates jumped back up just as they looked ready to fall.
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The headline is the earnings beat. The story is the buildout.
Pro buyers like contractors and roofers already make up about half of Home Depot's revenue. The company has been quietly building a pro supply chain through deals.
It paid $18.25 billion in 2024 for SRS Distribution. SRS serves roofers, landscapers, and pool pros. Last year, Home Depot bought GMS, a building products supplier.
Last week, SRS itself wrapped a deal for Mingledorff's, an HVAC supplier. Each deal pulls Home Depot deeper into the goods contractors really buy.
McPhail says the total pro market is roughly $700 billion. Home Depot wins a chunk of it through DIY shoppers. But the bigger commercial flow - the daily orders contractors place for job sites - has long gone to specialty suppliers.
His framing was telling. He said Home Depot has "a right to win" the $700 billion pro market. But it does not "quite have the ability to win yet."
That is CFO-speak for "we are spending billions to get there."
The DIY side is doing what a stuck market and high rates would predict. Small jobs. Fewer trips. Pushed-off big projects.
Home Depot kept full-year guidance steady anyway. The team thinks the worst of the pressure is already in the numbers.
The bigger question is the pro pivot. Roofing, HVAC, and specialty supply are the bet. The M&A has been heavy.
If contractors keep moving their orders to Home Depot's pro channel, the next few quarters will start to show it. If they do not, this becomes a pricey bet on a buyer who did not switch.
McPhail bought himself another quarter to prove it.
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