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

Zacks Equity Research

Home Depot (HD) closed the most recent trading day at $233.88, moving -0.34% from the previous trading session. This move lagged the S&P 500's daily gain of 0.19%. At the same time, the Dow lost 0.11%, and the tech-heavy Nasdaq gained 0.81%.

Coming into today, shares of the home-improvement retailer had gained 2.88% in the past month. In that same time, the Retail-Wholesale sector lost 0.29%, while the S&P 500 gained 0.56%.

HD will be looking to display strength as it nears its next earnings release, which is expected to be November 19, 2019. On that day, HD is projected to report earnings of $2.52 per share, which would represent year-over-year growth of 0.4%. Our most recent consensus estimate is calling for quarterly revenue of $27.48 billion, up 4.46% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $10.12 per share and revenue of $110.71 billion, which would represent changes of +2.33% and +2.32%, respectively, from the prior year.

Any recent changes to analyst estimates for HD should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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. The Zacks Consensus EPS estimate has moved 0.03% higher within the past month. HD is currently a Zacks Rank #2 (Buy).

In terms of valuation, HD is currently trading at a Forward P/E ratio of 23.2. For comparison, its industry has an average Forward P/E of 14.54, which means HD is trading at a premium to the group.

We can also see that HD currently has a PEG ratio of 2.29. 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 1.38 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 20, putting it in the top 8% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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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