Ian King
Chief Strategist, Strategic Fortunes
Home Depot Holds Gains After Narrow Q2 Misses
Written by Chris Markoch. Published 8/19/2025.
Key Points
- Home Depot stock rose 3.2% after Q2 earnings narrowly missed expectations but showed the strongest comparable store sales gain in nearly two years.
- Solid operating margins, steady guidance, and modest strength in DIY and Pro customer channels encourage investors.
- Technical indicators show bullish momentum, though HD stock nears potential overbought levels with resistance around $409-$410.
Investors are bracing for weak earnings from many bellwether retail stocks this week, which may explain why they're still mildly bullish on Home Depot (NYSE: HD) after a better-than-feared earnings report.
In afternoon trading, HD stock is up 3.2%, trimming its initial morning jump but holding solid as investors digest the company's second-quarter earnings.
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The report delivered narrow misses on both the top and bottom lines. Revenue of $45.28 billion fell just short of the $45.43 billion analysts expected, while earnings per share (EPS) of $4.68 missed forecasts by one cent.
The Biggest Gain in Nearly Two Years
Home Depot's comparable store sales rose 1% in the quarter, slightly below forecasts. However, this was a substantial improvement from a 3.3% decline in the same period last year and marked the largest increase in almost two years.
The company highlighted modest strength among core Do-It-Yourself (DIY) customers tackling smaller, seasonal projects, and also noted robust demand in its Pro sales channel. While large-scale renovations remain on hold, consumers and professionals continue to take on smaller jobs.
Solid Margins and Steady Guidance
Investors were also encouraged by Home Depot's outlook for the rest of the year. The company reaffirmed its prior guidance, attributing its optimism to strong operating margins.
On the tariff front, management acknowledged some price increases but emphasized that over 50% of Home Depot's products are sourced domestically and not subject to import duties.
Navigating Cyclical Headwinds
Home Depot and its primary competitor, Lowe's Companies Inc. (NYSE: LOW), are cyclical stocks: they tend to outperform when the housing market is strong and lag when it's tight.
So far in 2025, HD and LOW shares are up 4.9% and 3.3%, respectively.
During the conference call, management said the "number one reason for deferring large projects is general economic uncertainty," suggesting that Home Depot's fortunes may hinge more on overall confidence than on potential rate cuts later this year.
Slow But Steady Could Pay Off for HD Stock
One advantage of Home Depot's market position is its relative stability compared with more volatile tech names. Since June, HD has formed higher lows around the $350 level, indicating a steady uptrend.
Technical indicators support this trend. Bollinger Bands show neither significant contraction nor expansion, although the stock is now approaching the upper band with an RSI near 65—levels that can signal overbought conditions.
The MACD remains positive, with the MACD line above the signal line, though the gap has narrowed recently. That suggests a possible short-term deceleration in momentum—a common pattern for a stock trading at about 26x forward earnings.
That valuation is slightly higher than the sector average and above Home Depot's historical norm.
Key near-term support lies at the middle Bollinger Band around $400 and the lower band near $391, while immediate resistance sits at $409–$410, aligning with the upper Bollinger Band.
Overall, HD appears technically strong, benefiting from sustained bullish momentum. However, traders should watch for potential pullbacks as it tests resistance near the upper Bollinger Band.
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