News of Home Depot’s acquisition of building materials distributor GMS lifted investor sentiment. HD shares extended the sharp rally that began on 20 June.
The Home Depot, Inc. (NYSE: HD) delivered strong results for Q1 FY2025, with revenue rising 9% to 39.9 billion USD, driven by steady demand for small DIY projects and seasonal spring products. Management emphasised that the company would absorb any additional costs related to new tariffs without passing them on to customers. Despite a slight miss on adjusted earnings per share (3.56 USD versus the expected 3.60 USD), Home Depot reaffirmed its full-year outlook.
Market reaction to the report was mixed. Trading in the stock opened with a 3% upward gap the day after the earnings release, but by the end of the session, the gains had been erased. In the following days, HD shares retreated, as investors reacted cautiously to the company’s warning of demand pressure due to elevated interest rates, as well as its decision to shoulder tariff-related expenses, which could weigh on profitability. However, over the long term, this move may support higher returns by helping the company expand its market share. In addition, in June, Home Depot announced its acquisition of building materials distributor GMS, further strengthening its position in the professional segment.
This article reviews The Home Depot, Inc., outlines the company’s main revenue sources, summarises its performance in Q1 FY2025, and presents expectations for Q2 FY2025. A technical analysis of HD is also provided, forming the basis for Home Depot’s share price forecast for the 2025 calendar year.
The Home Depot, Inc. is the largest home improvement and construction retail chain in the US. The company was founded in 1978 by entrepreneurs Bernard Marcus, Arthur Blank, Ron Brill, and Pat Farrah in Atlanta, Georgia. Home Depot went public in 1981, listing on the New York Stock Exchange under the ticker HD.
Its core business involves the sale of building materials, tools, renovation supplies, gardening products, and home improvement goods, as well as related services for both private and commercial customers.
Key competitors include Lowe’s, Walmart (NYSE: WMT), Menards, and online retailer Amazon in the home improvement and DIY categories.
Image of the company name The Home Depot, Inc.
The Home Depot, Inc.’s main financial streams
Home Depot’s business model is built around the sale of products and services related to home improvement, construction, and renovation. The company’s revenue is generated from the following key components:
- Retail product sales: This segment is the company’s primary source of revenue, encompassing the sale of building materials, tools, plumbing supplies, lighting fixtures, flooring, furniture, appliances, and gardening equipment
- E-commerce: Home Depot continues to expand its online presence. Revenue is generated through direct online orders as well as ‘buy online, pick up in store’ (BOPIS) and home delivery models
- Installation and repair services: The company offers paid services, including kitchen, flooring, door and window installation, appliance setup, and home repairs
- Professional customer (Pro Business) sales: A significant portion of revenue comes from Pro customers – building contractors, tradespeople, and organisations that regularly purchase large volumes of materials and tools
- Financial and related services: Additional income is generated through financing solutions, gift cards, loyalty programs, equipment rentals, and value-added services designed to support home improvement and construction projects
Home Depot’s business model combines mass retail with tailored services for both DIY consumers and professionals, leveraging a broad product range, in-store services, and digital channels to drive sustainable revenue growth.
The Home Depot, Inc. Q1 FY2025 report
On 20 May, Home Depot released its financial results for Q1 FY2025, which ended on 4 May. The key figures compared with the same period last year are as follows:
- Revenue: 39.86 billion USD (+9%)
- Net profit: 3.43 billion USD (-32%)
- Earnings per share: 3.56 USD (-30%)
- Operating margin: 13.2% (-90 basis points)
Home Depot’s Q1 FY2025 report showed continued revenue growth of 9.4% year-on-year, reaching 39.9 billion USD, slightly ahead of analysts’ expectations. This performance reflects stable customer activity (nearly 395 million transactions), even as the average transaction value remained flat. Comparable sales declined by 0.3% overall due to currency fluctuations; however, a 0.2% increase in the US highlights the resilience of its core domestic market. Adjusted earnings per share came in at 3.56 USD, slightly below expectations, breaking a multi-quarter run of upside surprises – although the miss was marginal.
During the earnings call, management emphasised a measured and strategic approach. Despite the introduction of new tariffs, Home Depot chose not to pass additional costs on to consumers by raising prices across a broad range of products. This was made possible by its diversified supply chain, with approximately half of its inventory sourced domestically and no single foreign country accounting for more than 10%. As a result, the company opted to absorb the additional expenses itself, helping to preserve its competitive positioning – in contrast to competitors such as Walmart, which has signalled plans to increase prices for consumers.
The company reaffirmed its full-year guidance, forecasting revenue growth of approximately 2.8%, comparable sales growth of around 1%, and a decline in adjusted EPS of roughly 2%. The outlook for Q2 was also described as stable, although management pointed to ongoing pressure from elevated interest rates, which continue to weigh on demand for larger-scale projects.
For investors, the past quarter offered several encouraging signals: revenue growth was driven by smaller projects, pricing discipline remains intact, market share appears well-protected, and full-year targets were reaffirmed. Yes, the drop in EPS and macroeconomic risks, such as a strong US dollar and cautious consumer sentiment, suggest a more moderate near-term trajectory. Even so, the Q2 guidance supports confidence in the outlook, backed by modest sales growth expectations and steady performance in the US. Overall, for those seeking a defensive position in the consumer sector with strong margins and robust pricing discipline, Home Depot shares are an attractive option.
The Home Depot, Inc. acquires GMS
On 30 June 2025, Home Depot announced its acquisition of building materials distributor GMS for 5.5 billion USD, including net debt. The transaction provides Home Depot with several strategic advantages.
First and foremost, the company’s operational footprint will expand significantly. GMS’s more than 320 distribution centres and around 100 service locations will be added to the existing assets of SRS Distribution (a Home Depot subsidiary), creating a comprehensive logistics network comprising over 1,200 locations and 8,000 units of specialised delivery equipment for job sites. This strengthens Home Depot’s position in the professional contractor market, enabling it to offer a complete suite of solutions – from standard to specialist construction materials – including drywall, steel framing, tools, and related services.
In addition, through integration with SRS’s digital platforms and centralised logistics, the deal opens up opportunities to streamline supply chains, reduce costs, improve operating margins, and enhance service terms for Pro customers. The acquisition also neutralises competitive pressure from QXO, which had previously expressed interest in acquiring GMS, and reinforces Home Depot’s leadership in the B2B segment.
The deal is expected to be accretive to adjusted earnings per share within the first year following completion, representing a significant step towards delivering the company’s long-term growth strategy.
Expert forecasts for The Home Depot, Inc. stock
- Barchart: 26 out of 35 analysts rated Home Depot stock as Strong Buy, one as Moderate Buy, seven as Hold, and one as Strong Sell. The highest target price is 475 USD; the lowest (sell-side) target is 320 USD.
- MarketBeat: 22 out of 29 experts assigned a Buy rating, with seven recommending Hold. The highest target price is 470 USD.
- TipRanks: 19 out of 24 surveyed analysts assigned a Buy rating, and five recommended Hold. The highest target price is 475 USD.
- Stock Analysis: 10 out of 24 experts rated the stock as Strong Buy, 10 as Buy, and four as Hold. The highest target price is 470 USD.
Expert forecasts for The Home Depot, Inc. shares in 2025
The Home Depot, Inc. stock price forecast for 2025
On the weekly timeframe, Home Depot shares have been trading within an upward channel since March 2020. In December 2024, the stock reached a new all-time high of 430 USD, followed by a correction that has continued to date. The quarterly report was initially received positively by investors, with HD shares testing resistance at 380 USD. However, the stock subsequently failed to break through this level, indicating a high probability of continued corrective decline. Based on the current performance of Home Depot shares, the scenarios for HD stock price movement in 2025 are as follows:
The base-case forecast for Home Depot shares anticipates further price declines within the correction phase, down to support around 300 USD. A rebound from this level would indicate the end of the correction and the resumption of the upward trend. The target resistance level for growth is at 460 USD.
The alternative forecast for Home Depot stock suggests a breakout above the 380 USD resistance level, signalling the end of the correction and acting as a catalyst for further price growth towards the resistance line at 460 USD.
The Home Depot, Inc. stock analysis and forecast for 2025
Risks of investing in The Home Depot, Inc. stock
Investing in Home Depot stock involves a range of external and internal risk factors that could negatively impact the company’s revenue and financial performance. The key risks include:
- Dependence on broader economic conditions and the housing market: Demand for home improvement and construction products is closely linked to macroeconomic factors, mortgage interest rates, and housing market activity. A recession, rising interest rates, or a slowdown in residential construction could result in reduced sales
- Volatility in raw material prices and logistics costs: Increases in the cost of lumber, metals, oil, or transportation may drive up input costs, potentially squeezing margins or dampening consumer demand
- Competitive and pricing pressures: Home Depot faces intense competition from Lowe’s, Menards, Amazon, and other retailers. Greater pricing pressure or a loss of market share could weigh on revenue and profitability
- Exposure to the professional customer segment (Pro): The Pro segment accounts for a significant share of revenue. A slowdown in construction activity or a decline in demand from contractors could affect the company’s financial results
- Changes in consumer behaviour: A decline in interest in DIY projects, particularly among younger demographics, or a shift towards online channels dominated by other players could challenge Home Depot’s traditional retail model
- Regulatory and labour-related risks: Stricter labour regulations, higher minimum wages, or recruitment and retention difficulties could increase operating costs and compromise service quality
These risks should be considered when assessing the resilience of Home Depot’s business model and the long-term outlook for its shares.
Source: Roboforex
