Home improvement retail giant Home Depot (NYSE: HD) met Wall Street’s revenue expectations in Q4 CY2025, but sales fell by 3.8% year on year to $38.2 billion. Its non-GAAP profit of $2.72 per share was 7.8% above analysts’ consensus estimates.

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Company Overview

Founded and headquartered in Atlanta, Georgia, Home Depot (NYSE: HD) is a home improvement retailer that sells everything from tools to building materials to appliances.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years.

With $164.7 billion in revenue over the past 12 months, Home Depot is a behemoth in the consumer retail sector and benefits from economies of scale, giving it an edge in distribution. This also enables it to gain more leverage on its fixed costs than smaller competitors and the flexibility to offer lower prices. However, its scale is a double-edged sword because there is only so much real estate to build new stores, placing a ceiling on its growth. To expand meaningfully, Home Depot likely needs to tweak its prices or enter new markets.

As you can see below, Home Depot grew its sales at a sluggish 1.5% compounded annual growth rate over the last three years as it didn’t open many new stores.

This quarter, Home Depot reported a rather uninspiring 3.8% year-on-year revenue decline to $38.2 billion of revenue, in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 4.1% over the next 12 months, an acceleration versus the last three years. This projection is above the sector average and indicates its newer products will spur better top-line performance.

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Store Performance

Number of Stores

The number of stores a retailer operates is a critical driver of how quickly company-level sales can grow.

Home Depot listed 2,359 locations in the latest quarter and has kept its store count flat over the last two years while other consumer retail businesses have opted for growth.

When a retailer keeps its store footprint steady, it usually means demand is stable and it’s focusing on operational efficiency to increase profitability.

Same-Store Sales

The change in a company's store base only tells one side of the story. The other is the performance of its existing locations and e-commerce sales, which informs management teams whether they should expand or downsize their physical footprints. Same-store sales gives us insight into this topic because it measures organic growth for a retailer's e-commerce platform and brick-and-mortar shops that have existed for at least a year.

Home Depot’s demand within its existing locations has barely increased over the last two years as its same-store sales were flat. This performance isn’t ideal, and we’d be skeptical if Home Depot starts opening new stores to artificially boost revenue growth.

In the latest quarter, Home Depot’s year on year same-store sales were flat. This performance was more or less in line with its historical levels.

Key Takeaways from Home Depot’s Q4 Results

It was good to see Home Depot narrowly top analysts’ gross margin expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. Zooming out, we think this was a decent quarter despite just in-line revenue that declined year on year. The stock traded up 4.2% to $393 immediately following the results.

So should you invest in Home Depot right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).