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Investors are bailing on Home Depot (HD) shares ahead of the company's Q2 earnings on Aug. 18, especially since the options market believes they are unlikely to recover following the release. Consensus is for the home improvement retailer to record $4.71 in earnings per share (EPS) for its second quarter, which would represent a marginal 0.64% increase on a year-over-year basis. 

Home Depot stock has been a muted investment in 2026, currently down about 2% year-to-date. 

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For options contracts expiring Aug. 21, put volume is currently exceeding the call volume — and by a significant margin — as evidenced by the ratio of 1.48x as of writing. 

This signals a bearish skew, with the lower price on those contracts indicating potential for a 3.63% decline in HD shares to under $350 by the end of this week. Crucially, this bearish sentiment is echoed in the technical setup as well. 

On Monday, Home Depot crashed below its 20-day moving average (MA), indicating bears have taken back control for the near term.  

The cautious options market sentiment reflects growing concerns over persistent macro headwinds impacting consumer spending. 

Higher mortgage rates and a subdued housing market continue to choke home turnover, weighing on demand for big-ticket remodeling and discretionary DIY projects. 

Consumers are increasingly prioritizing smaller, essential repairs over major renovations, limiting HD's top-line momentum. 

Moreover, profitability could face pressure due to rising labor costs and integration expenses tied to recent acquisitions, including SRS Distribution. 

Together, all of this could lead to margin compression, making it increasingly difficult for Home Depot shares to stage a meaningful comeback in the second half of 2026. 

On the flip side, Wall Street analysts are bullish on HD stock heading into the Q2 release, especially since it currently pays a healthy dividend yield of 2.76%. 

The consensus rating on Home Depot sits at "Moderate Buy," with the mean price target of nearly $373 signaling potential for a more than 10% rally over the next 12 months. 

On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com