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Home Depot (HD) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

Home Depot (HD) closed the most recent trading day at $213.08, moving +0.86% from the previous trading session. This change outpaced the S&P 500's 0.69% gain on the day. Meanwhile, the Dow gained 0.65%, and the Nasdaq, a tech-heavy index, added 0.58%.

Prior to today's trading, shares of the home-improvement retailer had gained 2.81% over the past month. This has outpaced the Retail-Wholesale sector's gain of 2.38% and the S&P 500's gain of 1.36% in that time.

Wall Street will be looking for positivity from HD as it approaches its next earnings report date. The company is expected to report EPS of $3.09, up 1.31% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $31.01 billion, up 1.79% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $10.17 per share and revenue of $111.35 billion. These totals would mark changes of +2.83% and +2.91%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for HD. 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. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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. Within the past 30 days, our consensus EPS projection has moved 0.67% higher. HD currently has a Zacks Rank of #3 (Hold).

Investors should also note HD's current valuation metrics, including its Forward P/E ratio of 20.78. This valuation marks a premium compared to its industry's average Forward P/E of 12.51.

It is also worth noting that HD currently has a PEG ratio of 1.94. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Building Products - Retail was holding an average PEG ratio of 1.35 at yesterday's closing price.

The Building Products - Retail industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 103, putting it in the top 41% 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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