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The housing market is still under pressure, leading to lower interest in home improvement projects.
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Home Depot’s model has a natural hedge because even in these times, people need to do small home improvement projects.
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The company has diversified its supplier base to boost its leverage.
Is home improvement giant Home Depot (NYSE: HD) stock a buy on the dip? If you’re looking for a great value stock, Home Depot stock looks priced to buy today.
The market is hovering just north of flat for the year, and there’s a tentative confidence in the economy. Many tariff issues have been worked out for now, and U.S. companies are demonstrating resilience. However, it’s fragile. With interest rates still high and the real estate market still low, many companies, specifically related to the housing market, are still under pressure.
Home Depot has been reporting moderate performance, and it’s not expecting that to let up as long as conditions remain the way they are right now. Home Depot stock is 18% off its all-time high, and investors should take a look.
Mortgage rates are still high, and the real estate market is still stagnating. According to Redfin data, housing prices rose in May, while house sales tumbled 6% from last year. The national average 30-year fixed mortage rate was 6.8%, slightly lower from last year, but still elevated.
This is mostly detrimental to Home Depot’s business, because people invest in renovating new homes, whether big projects or small. They try to avoid investing in old homes that they plan to leave. The flip side, though, is that if they remain in their older homes, they have no choice but to fix them up to make them livable or comfortable. That provides a natural hedge against negative market forces. That was borne out in recent results, which demonstrate that customers are shopping for small projects while putting big remodeling jobs on hold.
Home Depot is the largest home improvement retail chain in the world, and it has a robust omnichannel network serving individuals and pros. The vast and varied business means that it has many levers to pull to generate engagement and sales.
Under any circumstances, Home Depot operates in a great industry because there’s always a need for it. Management pointed out that the housing stock is aging, with 55% of U.S. homes at least 40 years old. They’re most homeowners’ largest asset, and these houses need work.
In the 2025 fiscal first quarter (ended May 4), sales were up 9.4%, but comparable sales (comps) were roughly flat year over year. Earnings per share (EPS) declined from $3.63 last year to $3.45 this year, and the results were in line with expectations. For the full year, management is guiding for modest growth in sales and comps and a modest decrease in EPS.
