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

Zacks Equity Research

Home Depot (HD) closed at $230.83 in the latest trading session, marking a +0.27% move from the prior day. The stock outpaced the S&P 500's daily gain of 0.03%. Meanwhile, the Dow gained 0.13%, and the Nasdaq, a tech-heavy index, lost 0.11%.

Prior to today's trading, shares of the home-improvement retailer had gained 6.04% over the past month. This has outpaced the Retail-Wholesale sector's gain of 4.61% and the S&P 500's gain of 4.17% in that time.

HD will be looking to display strength as it nears its next earnings release. On that day, HD is projected to report earnings of $2.52 per share, which would represent year-over-year growth of 0.4%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $27.46 billion, up 4.4% from the year-ago period.

HD's full-year Zacks Consensus Estimates are calling for earnings of $10.11 per share and revenue of $110.72 billion. These results would represent year-over-year changes of +2.22% and +2.33%, respectively.

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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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.

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. Within the past 30 days, our consensus EPS projection has moved 0.28% higher. HD is holding a Zacks Rank of #3 (Hold) right now.

Looking at its valuation, HD is holding a Forward P/E ratio of 22.77. Its industry sports an average Forward P/E of 14.22, so we one might conclude that HD is trading at a premium comparatively.

It is also worth noting that HD currently has a PEG ratio of 2.13. 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. Building Products - Retail stocks are, on average, holding a PEG ratio of 1.42 based on yesterday's closing prices.

The Building Products - Retail industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 198, which puts it in the bottom 23% 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.

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


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