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

Zacks Equity Research
·3 min read

In the latest trading session, Home Depot (HD) closed at $265.26, marking a -0.35% move from the previous day. This move lagged the S&P 500's daily gain of 0.13%. Meanwhile, the Dow gained 0.24%, and the Nasdaq, a tech-heavy index, added 0.15%.

Prior to today's trading, shares of the home-improvement retailer had lost 3.76% over the past month. This has lagged the Retail-Wholesale sector's loss of 0.15% and the S&P 500's gain of 2.59% in that time.

HD will be looking to display strength as it nears its next earnings release. In that report, analysts expect HD to post earnings of $2.57 per share. This would mark year-over-year growth of 12.72%. Our most recent consensus estimate is calling for quarterly revenue of $30 billion, up 16.38% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $11.76 per share and revenue of $129.56 billion. These totals would mark changes of +14.73% and +17.54%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for HD. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

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. Within the past 30 days, our consensus EPS projection has moved 0.38% higher. HD is currently a Zacks Rank #3 (Hold).

Looking at its valuation, HD is holding a Forward P/E ratio of 22.64. For comparison, its industry has an average Forward P/E of 18.03, which means HD is trading at a premium to the group.

It is also worth noting 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. Building Products - Retail stocks are, on average, holding a PEG ratio of 1.11 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 38, which puts it in the top 15% 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.

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

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Zacks Investment Research