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Call sheet · Q1'26

Home Depot (HD)

Q1'26 earnings call · held May 19, 2026 · compared with the Q4'25 call · management-credibility review
8/12
Disclosure score
4 medium, 4 low flags
Financial quality
Bottom line
The sleeper story everyone is missing: HD is quietly assembling the most dominant B2B distribution network in history while retail comps muddle along. SRS crushed competitors by hundreds of basis points and the $400M cross-sell run rate (doubling to $800M next year) proves the acquisition thesis. The real constraint isn't consumer demand, it's HD's ability to fully integrate these acquisitions fast enough to capture the massive market share opportunity. Ted's most revealing quote: 'what we are building is unique and not easy to replicate' - he's right, and the market is undervaluing this transformation. My view changes if cross-sell growth stalls or they start missing the specific integration milestones they've committed to.

The 30-second version

  • SLEEPER STORY: GMS integration is quietly crushing it while everyone focuses on weak comps
  • Spring demand is actually fine - it's just getting chopped up by weather volatility
  • They quietly stopped giving SRS segment detail and margin guidance got mushier

What changed this quarter

MetricQ4'25Q1'26Change
Total Sales$38.2B (down 3.8% YoY)$41.8B (up 4.8% YoY)Solid rebound, driven by acquisitions not organic
Comp Sales0.4% (U.S. 0.3%)0.6% (U.S. 0.4%)Marginal improvement but still anemic
Adj. EPS$2.72 (down 13.1% YoY)$3.43 (down 3.7% YoY)Less bad, but still declining
Gross Margin32.6% (down 20bps YoY)33.0% (down 75bps YoY)Steeper deterioration from GMS mix
Operating Margin10.1%11.9%Better but still below historical
Adj. Operating Margin10.5%12.3%Solid improvement
Inventory$25.8B (up $2.4B YoY)$27.3B (up $1.5B YoY)Still building but pace slowing
Inventory Turns4.4x (down from 4.7x)4.2x (down from 4.3x)Continued deterioration in efficiency
Big Ticket Comps1.3% positive0.8% positiveWeakening momentum in key driver
Online Comp Growth~11%>10%Fourth straight quarter double-digit

Accountability tracked

8 new promises made4 narrative shifts flagged6 prior promises scored
Inside the full report
The complete write-up covers the full promise ledger with kept/missed calls, disclosure-quality scoring, the metrics-vanished check, verification items, and the questions to ask next quarter.
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This is a free preview. The full write-up and promise ledger are published to subscribers on Substack.
Scores, kept-promise rates, and flags on this site reflect the author's opinion, applying a stated methodology to statements management made on public earnings calls. Informational and educational purposes only - not investment advice, a recommendation, or an offer to buy or sell any security. Sources believed reliable but not guaranteed; the author may hold positions in the securities discussed.

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