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Home Depot (HD) Gains As Market Dips: What You Should Know

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Home Depot (HD) closed the most recent trading day at $287.18, moving +0.72% from the previous trading session. This move outpaced the S&P 500's daily loss of 0.45%. At the same time, the Dow lost 0.67%, and the tech-heavy Nasdaq lost 0.05%.

Prior to today's trading, shares of the home-improvement retailer had gained 2.31% over the past month. This has outpaced the Retail-Wholesale sector's loss of 0.6% and the S&P 500's loss of 1.89% in that time.

Wall Street will be looking for positivity from Home Depot as it approaches its next earnings report date. This is expected to be August 16, 2022. In that report, analysts expect Home Depot to post earnings of $4.94 per share. This would mark year-over-year growth of 9.05%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $43.32 billion, up 5.36% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $16.47 per share and revenue of $155.8 billion, which would represent changes of +6.05% and +3.07%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for Home Depot. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. Home Depot currently has a Zacks Rank of #2 (Buy).

Valuation is also important, so investors should note that Home Depot has a Forward P/E ratio of 17.31 right now. Its industry sports an average Forward P/E of 8.38, so we one might conclude that Home Depot is trading at a premium comparatively.

Also, we should mention that HD has a PEG ratio of 1.71. 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. The Building Products - Retail industry currently had an average PEG ratio of 1.71 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 19, putting it in the top 8% 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.

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


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