Is Home Depot Facing a Structural Demand Reset After Soft Q3 Comps?

The Home Depot, Inc.’s HD comparable sales growth of just 0.2% in the third quarter of fiscal 2025, following a 1% increase in the second quarter, raises an important question: Is this soft comparable sales growth a sign of a lasting demand reset? The company's results missed expectations as the anticipated demand increase did not materialize. A major factor was the lack of storm activity, which impacted categories like roofing and plywood.Management also noted that consumer uncertainty and ongoing pressure in housing are disproportionately affecting home improvement demand. This pressure appears structural, with housing activity at four-decade lows in terms of housing stock turnover. The softness is especially noticeable in larger discretionary projects where customers often use financing.Despite these challenges, the underlying demand in the core business seems to have remained steady sequentially. The company’s underlying comparable sales, adjusted for storm and weather effects, grew 1% in the third quarter, matching the increase in the preceding quarter. Additionally, the average ticket size rose 1.8%, while big-ticket transactions above $1000 increased 2.3%. For fiscal 2025, Home Depot now predicts comparable sales growth to be slightly positive compared to its previous forecast of 1% growth. The revised outlook reflects lower-than-expected third-quarter results, ongoing pressure in the final quarter due to the lack of weather-driven activity, continued consumer uncertainty and housing pressures. Even a drop in mortgage rates has not spurred the desired demand.With customers prioritizing essentials and pro backlogs beginning to ease, the quarter’s results point toward a market that may be settling into a lower-demand equilibrium. The soft comparable sales, therefore, look less like a temporary disruption and more like an early signal of a structural shift shaped by housing constraints and persistent consumer caution.Are FND and LOW Also Seeing a Structural Demand Reset?Floor & Decor Holdings, Inc. FND continues to face industry-wide softness, with third-quarter 2025 comparable store sales down 1.2% as transactions remain pressured. Despite better Pro engagement and category innovation, Floor & Decor repeatedly acknowledged that the hard-surface flooring market remains in a “trough” and that demand recovery is uncertain. This suggests Floor & Decor is navigating similar structural headwinds as Home Depot.Lowe's Companies, Inc. LOW posted third-quarter comparable sales at 0.4% but also cited an anxious consumer and continued pressure on big-ticket discretionary spending. While Pro, appliances and online improved, Lowe's emphasized that affordability constraints and macro uncertainty remain barriers to any broad rebound. Overall, Lowe's also appears constrained by the same structural demand backdrop limiting large-project activity.What the Latest Metrics Say About Home DepotHome Depot shares have fallen 16.4% in the past year compared with the industry’s decline of 21.9%. Image Source: Zacks Investment ResearchFrom a valuation standpoint, Home Depot trades at a forward price-to-earnings ratio of 23.21, higher than the industry’s 21.12. HD carries a Value Score of D. Image Source: Zacks Investment ResearchThe Zacks Consensus Estimate for Home Depot’s current financial-year sales implies year-over-year growth of 3.1%, while the same for earnings per share suggests a decline of 3.9%. Image Source: Zacks Investment ResearchHome Depot currently carries a Zacks Rank #4 (Sell).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Research Chief Names "Single Best Pick to Double"From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Lowe's Companies, Inc. (LOW): Free Stock Analysis Report The Home Depot, Inc. (HD): Free Stock Analysis Report Floor & Decor Holdings, Inc. (FND): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks