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

Zacks Equity Research
·3 mins read

Home Depot (HD) closed the most recent trading day at $287.09, moving -1.13% from the previous trading session. This move lagged the S&P 500's daily loss of 0.66%. Elsewhere, the Dow lost 0.58%, while the tech-heavy Nasdaq lost 0.8%.

Prior to today's trading, shares of the home-improvement retailer had gained 1.67% over the past month. This has lagged the Retail-Wholesale sector's gain of 9.09% and the S&P 500's gain of 5.22% in that time.

HD will be looking to display strength as it nears its next earnings release. In that report, analysts expect HD to post earnings of $2.97 per share. This would mark year-over-year growth of 17.39%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $31.41 billion, up 15.38% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $11.36 per share and revenue of $125.59 billion. These totals would mark changes of +10.83% and +13.94%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for HD. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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 0.54% higher. HD is currently sporting a Zacks Rank of #3 (Hold).

Digging into valuation, HD currently has a Forward P/E ratio of 25.55. This valuation marks a premium compared to its industry's average Forward P/E of 20.86.

We can also see that HD currently has a PEG ratio of 2.41. 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. The Building Products - Retail industry currently had an average PEG ratio of 1.24 as of yesterday's close.

The Building Products - Retail industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 47, putting it in the top 19% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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