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

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Zacks Equity Research
·3 min read
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In the latest trading session, Home Depot (HD) closed at $282.60, marking a -0.87% move from the previous day. This move lagged the S&P 500's daily loss of 0.15%. Elsewhere, the Dow lost 0.07%, while the tech-heavy Nasdaq lost 0.07%.

Wall Street will be looking for positivity from HD as it approaches its next earnings report date. In that report, analysts expect HD to post earnings of $2.57 per share. This would mark year-over-year growth of 12.72%. Meanwhile, our latest consensus estimate is calling for revenue of $30 billion, up 16.38% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $11.76 per share and revenue of $129.56 billion, which would represent changes of +14.73% and +17.54%, respectively, from the prior year.

Investors should also note any 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.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.05% higher within the past month. HD currently has a Zacks Rank of #2 (Buy).

In terms of valuation, HD is currently trading at a Forward P/E ratio of 24.14. Its industry sports an average Forward P/E of 16.02, so we one might conclude that HD is trading at a premium comparatively.

Also, we should mention that HD has a PEG ratio of 2.17. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. HD's industry had an average PEG ratio of 1.18 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 61, putting it in the top 24% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.

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