Home Depot's first quarter results were met with a negative market reaction as profitability came in slightly below expectations despite better-than-anticipated revenue growth. Management attributed the revenue gain to increased customer engagement in smaller home improvement projects and strong activity in Pro-heavy categories such as building materials and outdoor products. However, the quarter was challenged by continued softness in large-scale remodeling projects, which are more sensitive to higher interest rates. CEO Ted Decker described the business as "well-positioned" but acknowledged that elevated rates continue to limit demand for major renovations, and operating margin declined year over year due in part to the SRS acquisition and higher expenses.

Is now the time to buy HD? Find out in our full research report (it’s free).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions Home Depot’s Q1 Earnings Call

• Christopher Horvers (JP Morgan) asked about underlying demand trends and whether economic uncertainty masked true business momentum; CEO Ted Decker responded that while consumer sentiment has improved, high interest rates continue to limit large project engagement.
• Simeon Gutman (Morgan Stanley) questioned the level of caution in comparable sales guidance; CFO Richard McPhail maintained that guidance remains prudent given ongoing macro uncertainty, despite positive recent trends.
• Michael Lasser (UBS) inquired about tariff impacts on sourcing and pricing; EVP Billy Bastek stated that diversification and productivity initiatives would limit the need for broad-based price increases and minimize margin impact.
• Scot Ciccarelli (Truist) sought updates on the rollout of Pro capabilities in select markets; CEO Decker reported steady progress but no expansion beyond the initial 17 markets with dedicated flatbed distribution centers.
• Zhihan Ma (Bernstein) asked about inventory increases and potential pull-forward; McPhail clarified that inventory growth is primarily due to SRS integration, with current inventory levels appropriately positioned for the peak spring and summer seasons.

Catalysts in Upcoming Quarters

In the quarters ahead, StockStory analysts will monitor (1) progress in capturing deferred demand for large renovation projects as interest rates evolve, (2) the pace and impact of SRS integration on both sales and operating margins, and (3) continued advancements in digital tools and supply chain diversification. Execution in these areas will provide key signals on Home Depot’s ability to sustain growth and manage cost pressures.

Home Depot currently trades at $371.80, down from $379.19 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).

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