Key Takeaways
- Q4 FY25 net sales of $38.2B beat the $38.14B consensus and adjusted EPS of $2.72 beat the $2.54 consensus by ~7%, marking the second consecutive quarterly EPS beat. Headline sales declined 3.8% YoY against a 14-week prior-year quarter that included an extra ~$2.5B; adjusted for the calendar, sales grew low-single digits.
- Comparable sales returned to positive territory: total comps +0.4% and U.S. comps +0.3%, the second positive quarter in FY25 and a clean inflection from eight quarters of decline. Average ticket +0.3% with reported total transactions +7.6% (boosted by the GMS and SRS Distribution acquisitions; organic transactions roughly flat).
- Operating margin compressed 120 bps YoY to 10.1% — the GMS acquisition (closed in Q3 FY25) drove ~80 bps of dilution from B2B distribution mix, with the remainder from incremental SG&A investment in supply chain and Pro infrastructure. Gross margin held at 32.6% (-20 bps) with merchandising margin stable; SG&A rate of 19.5% (+30 bps) reflects the acquisition mix.
- Full-year FY25 results: sales $164.7B (+3.2%), comp sales +0.3%, adjusted EPS $14.69 vs. $15.11 prior year. Both SRS Distribution (acquired June 2024) and GMS contributed to the headline reacceleration; underlying organic growth was approximately flat.
- FY26 guidance: total sales growth of +2.5% to +4.5%, comparable sales flat to +2.0%, adjusted EPS approximately flat to +4.0% (~$14.69 to $15.28), gross margin approximately flat YoY, ~15 new stores, and ~$3-3.5B in capex. Guidance implies a modest acceleration into a stabilizing housing backdrop.
- Dividend raised 1.3% to $2.30/quarter ($9.20 annualized; ~2.4% yield); the 16th consecutive annual increase. Share repurchases remain paused while management deleverages from the GMS acquisition; we expect buybacks to resume meaningfully in 2H FY26.
- Maintain BUY; raise price target to $420 (from $410) on slightly higher FY27 EPS estimate and confirmation that comp inflection is durable. Housing turn remains the principal swing factor; we see 9% upside plus a 2.4% dividend yield with limited downside given comp stability and Pro mix tailwinds.
Snapshot
| Metric | Q4 FY25 Actual | Consensus | Variance |
|---|---|---|---|
| Net sales | $38.20B | $38.14B | +0.2% / -3.8% YoY (vs. 14-wk PY) |
| Adjusted Diluted EPS | $2.72 | $2.54 | +7.1% / -13.1% YoY |
| GAAP Diluted EPS | $2.58 | n/a | -14.6% YoY |
| U.S. comparable sales | +0.3% | -0.4% | +70 bps beat |
| Total comparable sales | +0.4% | -0.3% | +70 bps beat |
| Gross margin | 32.6% | ~32.7% | -20 bps YoY / -10 bps vs. cons |
| Operating margin | 10.1% | 10.4% | -120 bps YoY / -30 bps vs. cons |
| Customer transactions (reported) | +7.6% | n/a | Boost from GMS/SRS M&A |
What’s in the full report
The PDF (~16-page report) includes the full narrative, charts, and detailed analysis across:
- Detailed Results — Q4 FY2025
- Margin Walk
- Comparable Sales — The Inflection
- Category & Channel Detail
- Pro Mix — The Strategic Pivot
- Full-Year FY2025 Results
- Guidance — FY2026
- Investment Thesis — Updated
- What changed since our last update
- Key Risks
- Catalysts (next 90 days)
- Capital Return
- Valuation & Estimates
- Estimate revisions
- Scenario analysis
- Bottom Line
The web page is a free preview. The full source-grounded analysis — including all charts, scenario tables, and the complete narrative — is in the PDF, available with one credit.