Home Depot (HD) reported fiscal fourth-quarter results above Wall Street's estimates on Tuesday but the company provided a full-year earnings outlook below market expectations amid cautious consumer spending on large remodeling projects.

The home-improvement retailer anticipates per-share adjusted earnings in fiscal 2025 to be down about 2% from the $15.24 recorded in the previous fiscal year. The current consensus on FactSet is for non-GAAP EPS of $15.64.

The earnings guidance likely indicates a higher selling, general and administrative expenses impact than expected, Truist Securities said in a client note. "Given the company's forecast for flat (gross margin) of approximately 33.4%, there is clearly some sort of drag on SG&A that (management) will need to clarify," according to the brokerage.

The impact of potential tariffs, political uncertainty and high interest rates are weighing on the demand outlook, Wedbush Securities said in a separate note. Home Depot is facing "normal cost pressures" that are driving the earnings forecast below market expectations, the investment company said.

Sales are pegged to grow roughly 2.8% year over year from the $159.51 billion logged in fiscal 2024, according to the retailer. Comparable sales are set to increase by about 1% for the ongoing fiscal year. The Street is looking for sales of $164.08 billion and same-store sales to rise by 1.7%.

For the three-month period ended Feb. 2, adjusted EPS inclined to $3.13 from $2.86 the year before, topping the average analyst estimate of $3.04. Sales climbed 14% year over year to $39.7 billion, ahead of the Street's view for $39.15 billion.

"Our fourth-quarter results exceeded our expectations as we saw greater engagement in home improvement spend, despite ongoing pressure on large remodeling projects," Chief Executive Ted Decker said in a statement. "Throughout the year, we remained steadfast in our investments across our strategic initiatives to position ourselves for continued success, despite uncertain macroeconomic conditions and a higher interest rate environment that impacted home improvement demand."

Comparable sales edged up 0.8% at the company level, compared with a 1.5% decline modeled by the market. The metric gained 1.3% in the US. The number of transactions inclined 7.6% to 400.4 million. The average ticket prices nudged 0.3% higher to $89.11, while sales per retail square foot rose 1.2%.

Home Depot's operating margin came in at 11.3% for the quarter, down from 11.9% a year ago. Total operating expenses rose to $8.54 billion from $7.37 billion in the prior-year period, according to the company.