Home Depot Q2 EPS Stays Flat: Are Margins the Next Risk Factor?

Core Insights - Home Depot, Inc. reported second-quarter fiscal 2025 results showing stable earnings per share but ongoing margin pressure, with EPS at $4.58, slightly down from $4.60 a year ago [1][8] - The company reaffirmed its fiscal 2025 guidance, expecting a gross margin of approximately 33.4% and a decline in adjusted earnings per share by about 2% from $15.24 in fiscal 2024 [4][8] Financial Performance - The second-quarter gross margin was 33.4%, a slight improvement from the previous year, but the operating margin decreased to 14.5% from 15.1% in the same quarter of fiscal 2024 [2][8] - Operating expenses increased by 65 basis points as a percentage of sales, reaching 18.9%, with SG&A expenses climbing 8.7%, outpacing sales growth of 4.9% [3][4] Competitor Analysis - Lowe's Companies, Inc. reported a 5.6% increase in adjusted EPS to $4.33, with an adjusted gross margin of 33.8% and an adjusted operating margin of 14.7%, indicating effective cost management [5] - Floor & Decor Holdings, Inc. saw an 11.5% increase in earnings to 58 cents per share, managing gross margin and profitability despite external pressures [6] Market Position - Home Depot shares have increased by 10.4% over the past year, outperforming the industry growth of 7.4% [7] - The company trades at a forward price-to-earnings ratio of 26.16, higher than the industry average of 23.50, and carries a Value Score of D [9] Sales and Earnings Estimates - The Zacks Consensus Estimate for Home Depot's current financial-year sales implies a year-over-year growth of 2.9%, while earnings per share are expected to decline by 1.4% [10]