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

Zacks Equity Research

Home Depot (HD) closed at $232.79 in the latest trading session, marking a -0.53% move from the prior day. This change lagged the S&P 500's 0.31% gain on the day. Meanwhile, the Dow gained 0.44%, and the Nasdaq, a tech-heavy index, added 0.26%.

Heading into today, shares of the home-improvement retailer had gained 7.16% over the past month, outpacing the Retail-Wholesale sector's loss of 0.66% and the S&P 500's gain of 1.18% in that time.

Wall Street will be looking for positivity from HD as it approaches its next earnings report date. This is expected to be February 25, 2020. In that report, analysts expect HD to post earnings of $2.10 per share. This would mark a year-over-year decline of 6.67%. Meanwhile, our latest consensus estimate is calling for revenue of $25.76 billion, down 2.74% from the prior-year quarter.

HD's full-year Zacks Consensus Estimates are calling for earnings of $10.08 per share and revenue of $110.20 billion. These results would represent year-over-year changes of +1.92% and +1.85%, respectively.

Any recent changes to analyst estimates for HD should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. 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 remained stagnant. HD is currently a Zacks Rank #4 (Sell).

In terms of valuation, HD is currently trading at a Forward P/E ratio of 23.23. This represents a premium compared to its industry's average Forward P/E of 14.36.

We can also see that HD currently has a PEG ratio of 2.07. 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. HD's industry had an average PEG ratio of 1.28 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 64, putting it in the top 26% 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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