- Annual Sales Growth: Fiscal 2025 sales reached $164.7 billion, a 3.2% increase YoY, with U.S. comparable sales rising 0.5% and overall comps up 0.3%.
- Earnings Decline: Adjusted diluted EPS fell to $14.69 in 2025 from $15.24 in 2024, with Q4 EPS dropping to $2.72 from $3.13 YoY.
- Regional Performance: Northern and Western divisions saw positive comps, Mexico posted local-currency gains, while Canada reported negative comps.
- 2026 Guidance: Anticipates 2.5ā4.5% sales growth, flat to 2% comp sales, and adjusted EPS growth of flat to 4%, with gross margin expected at 33.1%.
- Strategic Investments: $3.7 billion in 2025 capex, $9.2 billion in dividends, and 2.5% of sales allocated to 2026 capex to enhance Pro services and digital tools like AI takeoff for projects.
Regional Performance and Business Highlights
The company's regional performance varied, with the Northern and Western divisions posting positive comps. Mexico reported positive comps in local currency, while Canada reported negative comps. The company is investing in its business to drive core and culture, deliver a frictionless interconnected experience, and win the Pro. The Pro ecosystem is seeing traction, with Pros spending more with the company. As the company noted, "Associates are delivering exceptional service, and merchants are offering tremendous value, as evidenced by record-setting events in the quarter."
Outlook and Guidance
Looking ahead to fiscal 2026, the company expects total sales growth of approximately 2.5% to 4.5%, comparable sales growth of approximately flat to 2%, and adjusted diluted earnings per share to grow approximately flat to 4%. The company's guidance implies a challenging market environment, with consumer uncertainty and pressure on housing. The company's valuation metrics, including a P/E Ratio of 26.97 and P/S Ratio of 2.32, suggest that the market is pricing in a moderate growth outlook.
Operational Highlights and Investments
The company is making significant investments in its digital planning tools, including project management and list builders for its Pros. The company's delivery capabilities have improved, with record levels of delivery reliability from its order management investments. The company is also investing in E-Procurement integration and construction management software integration to further support its B2B business. These investments are expected to drive growth and improve customer experience.
Valuation and Return Metrics
The company's valuation metrics, including a ROE of 130.02% and ROIC of 19.03%, suggest a strong return profile. The company's dividend yield of 2.39% and free cash flow yield of 3.3% provide a reasonable return for investors. Overall, the company's financial performance and guidance suggest a stable outlook, with opportunities for growth in its Pro ecosystem and B2B business.