Home Depot vs. Walmart: Divergent Paths Before August Earnings

Home Depot reports fiscal second-quarter results on Aug. 18, and Walmart follows two days later. The two Dow components are on sharply different trajectories, and the earnings calls will test whether each can sustain its current narrative.

Home Depot shares have risen just 5% over the past five years. The pandemic demand surge that lifted revenue in double digits in fiscal 2020 and 2021 has given way to tighter macroeconomic conditions. Higher interest rates and inflation have weighed on the business. Same-store sales fell 3.2% in fiscal 2023, dropped 1.8% in fiscal 2024, and eked out a 0.3% gain last year. The company sees same-store sales rising 1% at the midpoint this fiscal year.

Despite the soft top line, Home Depot has kept its dividend commitment. The quarterly payout stands at $2.33 per share. The company has raised the dividend in 17 consecutive years and has paid a dividend in 157 straight quarters, roughly 40 years. Free cash flow has been positive every fiscal year since at least 2008, including the recession years.

Investors on the Aug. 18 call will focus on same-store sales, customer spending on big-ticket items, and any guidance update. The stock trades at a price-to-earnings ratio of 24.8, well below Walmart's 39.3. The dividend yield is 2.67%, more than double Walmart's.

Walmart enters its Aug. 20 report with stronger momentum. Analysts expect revenue to rise 6.3% and diluted earnings per share to climb 8.8% year over year. The retailer benefits from a non-cyclical model: consumers lean on its low prices and broad assortment when the economy is under pressure.

"When I look at the consumer, especially here in the U.S., they're telling us, they're feeling some pressure and they're looking to Walmart for value," CEO John Furner said on the fiscal first-quarter 2027 earnings call.

Walmart has also built higher-margin revenue streams. The Walmart+ membership program adds a recurring subscription layer, and the Walmart Connect advertising platform is growing fast. The company has raised its dividend in 53 straight years, earning the Dividend King label. Shares are up 130% over the past five years.

Home Depot carries a lower valuation and a higher yield, but its cyclical exposure means the stock may not recover until interest rates ease and housing activity picks up. Walmart's growth is steadier, though its multiple leaves little room for error.

AlphaScala's proprietary score assigns Home Depot a 51 out of 100 (Mixed) and Walmart a 56 (Moderate). Both are below the "Strong" rating of NVDA at 78, but neither is a distressed name.

The two earnings reports will define the next leg for each stock. Home Depot needs to show that the worst of its sales decline is over. Walmart needs to prove that its margin expansion can continue without sacrificing the value message that draws shoppers in.