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

Zacks Equity Research
·3 mins read

Home Depot (HD) closed at $277.62 in the latest trading session, marking a -0.03% move from the prior day. This move lagged the S&P 500's daily gain of 0.53%. At the same time, the Dow added 0.13%, and the tech-heavy Nasdaq gained 1.42%.

Heading into today, shares of the home-improvement retailer had lost 3.3% over the past month, outpacing the Retail-Wholesale sector's loss of 3.37% and the S&P 500's loss of 3.76% in that time.

Investors will be hoping for strength from HD as it approaches its next earnings release. The company is expected to report EPS of $2.96, up 17% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $31.32 billion, up 15.05% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $11.35 per share and revenue of $125.45 billion, which would represent changes of +10.73% and +13.82%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for HD. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.41% higher. HD is currently sporting a Zacks Rank of #3 (Hold).

In terms of valuation, HD is currently trading at a Forward P/E ratio of 24.47. Its industry sports an average Forward P/E of 18.32, so we one might conclude that HD is trading at a premium comparatively.

We can also see that HD currently has a PEG ratio of 2.31. 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 1.18 as of yesterday's close.

The Building Products - Retail industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 18, which puts 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.

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

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The Home Depot, Inc. (HD) : Free Stock Analysis Report
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Zacks Investment Research