The Zacks Analyst Blog Highlights: Home Depot and Lowe's
For Immediate Release
Chicago, IL –August 14, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Home Depot HD and Lowe’s LOW.
Here are highlights from Monday’s Analyst Blog:
Home Depot (HD) Stock Sheds 1% Ahead of Earnings: What To Expect
Shares of Home Depot (HD) lost 1.1% during regular hours Monday, the last day of trading before the retailer releases its latest quarterly earnings report.
Home Depot investors were hesitant amid a volatile day of trading for broader markets, but this home improvement powerhouse is certainly still one to watch tomorrow.
Home Depot shares have been relatively stagnant this year to date, only moving about 3.2% higher. The company has been hurt by colder-than-normal weather that led to softness in the spring season categories. Intense competition from rivals, like Lowe’s (LOW), and macroeconomic headwinds have also challenged Home Depot recently.
However, a great report tomorrow could spur a rise in the stock. The company has a five-year long trend of positive earnings surprises. Is another beat in store?
Earnings Outlook
Home Depot will release its Q2 fiscal 2018 results before the market opens on Tuesday. Here’s what analysts are expecting, according to our Zacks Consensus Estimates.
Earnings: Home Depot is projected to post earnings of $2.84 per share. This would represent growth of 26.22% from the same quarter last year.
Estimate Revisions: Home Depot has seen two negative revisions to its soon-to-be reported quarter’s EPS estimates within the past 60 days. However, the Zacks Consensus Estimate has only slipped by one cent in that time.
Revenue: Consensus estimates have Home Depot’s Q2 revenue pegged at $29.98 billion. This would mark growth of 6.66% from the year-ago period. The company notably missed its first-quarter revenue due to the impact of poor weather, but this shouldn’t be as big of an issue in Q2.
Valuation
Home Depot currently has a forward P/E ratio of 20.76, a premium to the industry’s average of 15.17. The company is trading at about 2.22x trailing 12-month revenue heading into the report, also a premium to the industry’s average of 0.60x.
From this perspective, Home Depot might be overvalued and could face pressure to deliver strong results.
Bottom Line
Home Depot has a long-standing legacy of providing a diverse range of home-improvement items that positions it well in the retail industry. Further, a steady housing market and strong consumer demand will likely reap benefits.
However, the company missed top-line estimates in Q1 and hasn’t had the best price performance this year.
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The Home Depot, Inc. (HD) : Free Stock Analysis Report
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