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Home Depot (HD) Dips More Than Broader Markets: What You Should Know

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In the latest trading session, Home Depot (HD) closed at $300.71, marking a -1.67% move from the previous day. This change lagged the S&P 500's daily loss of 0.67%. At the same time, the Dow lost 1.23%, and the tech-heavy Nasdaq lost 0.05%.

Prior to today's trading, shares of the home-improvement retailer had gained 9.58% over the past month. This has outpaced the Retail-Wholesale sector's gain of 9.5% and the S&P 500's gain of 7.79% in that time.

Home Depot will be looking to display strength as it nears its next earnings release, which is expected to be August 16, 2022. On that day, Home Depot is projected to report earnings of $4.94 per share, which would represent year-over-year growth of 9.05%. Our most recent consensus estimate is calling for quarterly revenue of $43.32 billion, up 5.36% from the year-ago period.

HD's full-year Zacks Consensus Estimates are calling for earnings of $16.39 per share and revenue of $155.56 billion. These results would represent year-over-year changes of +5.54% and +2.91%, respectively.

It is also important to note the recent changes to analyst estimates for Home Depot. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.47% lower. Home Depot is currently sporting a Zacks Rank of #3 (Hold).

Looking at its valuation, Home Depot is holding a Forward P/E ratio of 18.66. This valuation marks a premium compared to its industry's average Forward P/E of 9.95.

Meanwhile, HD's PEG ratio is currently 2. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Building Products - Retail stocks are, on average, holding a PEG ratio of 2 based on yesterday's closing prices.

The Building Products - Retail industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 177, putting it in the bottom 30% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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