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

Zacks Equity Research
·3 min read

Home Depot (HD) closed the most recent trading day at $266.05, moving +0.81% from the previous trading session. This change outpaced the S&P 500's 0.71% gain on the day. Meanwhile, the Dow gained 0.56%, and the Nasdaq, a tech-heavy index, added 0.95%.

Coming into today, shares of the home-improvement retailer had gained 0.49% in the past month. In that same time, the Retail-Wholesale sector lost 3.15%, while the S&P 500 gained 0.17%.

Wall Street will be looking for positivity from HD as it approaches its next earnings report date. On that day, HD is projected to report earnings of $2.59 per share, which would represent year-over-year growth of 13.6%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $30 billion, up 16.38% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $11.77 per share and revenue of $129.56 billion, which would represent changes of +14.83% and +17.54%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for HD. These revisions typically reflect the latest short-term business trends, which can change frequently. 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. 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 0.11% higher within the past month. 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 22.42. For comparison, its industry has an average Forward P/E of 16.69, which means HD is trading at a premium to the group.

Investors should also note that HD has a PEG ratio of 2.05 right now. 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 1.11 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 20, 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.

To follow HD in the coming trading sessions, be sure to utilize Zacks.com.


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Zacks Investment Research