Home Depot Powers Past Housing Market Struggles to Notch Earnings Win
Wall Street’s latest obsession with asset-heavy stocks are buoying the home improvement company’s fortunes on Wall Street.
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Home Depot has remodeled Wall Street’s outlook on its stock.
Shares of the home improvement giant climbed 2% on Tuesday after the company’s performance beat analysts’ expectations during the last three months of its fiscal 2025 despite a lackluster housing market and drooping consumer confidence.
Home Depot’s adjusted earnings per share of $2.72 topped the $2.53 average estimate of analysts polled by FactSet. While sales fell nearly 4% to $38.2 billion, they were still higher than the $38.09 billion analysts expected. The Atlanta-based retailer also raised its quarterly dividend by 1.3% and said it would open about 15 new stores.
Housing vs. HALO
The home improvement company’s fortunes may get an additional boost from Wall Street’s latest obsession with asset-heavy stocks. Strategists at Goldman Sachs recently wrote that investors are increasingly turning to stocks with the “HALO effect” (heavy assets and low obsolescence) amid fears of AI disruption across industries such as financial services and software.
Home Depot’s business relies on a vast real estate footprint, inventory of everything from tools to paint to patio furniture, and a physical supply chain. In other words, it can’t turn much of its business over to bots in the way capital-light companies can, which investors find soothing:
- “Interest in Home Depot may be increasing as investors seek safety from AI-related volatility,” CFRA senior equity analyst Ana Garcia told The Daily Upside. “We have seen volume activity trending above its five-year average, which has seen share value increase since the beginning of 2026.”
- When asked whether AI-related fears are prompting investors to turn to Home Depot, Morningstar analyst Jaime Katz said, “I’d guess that has already happened.” The stock traded between $330 and $340 at the end of 2025 and has since moved up “without the home improvement environment changing much,” she added.
Housing Headache: Home price growth continued to cool at the end of last year, according to the latest S&P Cotality Case-Shiller Index data released on Tuesday. The numbers show a 1.3% annual gain for December 2025, down from 1.4% the previous month. “Inflation outpaced home price appreciation from June 2025 onward, eroding real home values through year-end and reversing a decade-long trend of positive real returns,” S&P Dow Jones Indices said in a statement.
