Back to top

Analyst Blog

The world’s largest home improvement retailer, Home Depot Inc. (HD - Analyst Report) is set to report second-quarter 2013 results on Aug 20. In the past quarter, it posted a positive surprise of approximately 7.8% and we expect the company to beat expectations for this quarter too.

Why a Likely Positive Surprise?

Our proven model shows that Home Depot may beat earnings because it has the right combination of two key components.

Positive Zacks ESP: Home Depot currently has Earnings ESP (Read: Zacks Earnings ESP: A Better Method) of +2.52%. This is because the Most Accurate Estimate stands at $1.22 per share, while the Zacks Consensus Estimate is pegged at $1.19.

Zacks #2 Rank (Buy): Note that stocks with a Zacks Rank #1, 2 and 3 have higher chances of beating earnings. The Sell rated stocks (#4 and 5) should never be considered going into an earnings announcement.

The combination of Home Depot’s Zacks Rank #2 (Buy) and Earnings ESP of +2.52% makes us confident of a positive earnings beat on Aug 20.

What is Driving Better-than-Expected Earnings?

Home Depot is a leading player in the highly fragmented home improvement industry. The company has been revamping itself by concentrating on square footage growth and the maximization of productivity from its existing store base. In addition, the company has implemented significant changes in its store operations to make them simpler and more customer-friendly. We believe that these initiatives will induce more traffic to its stores while boosting its top line.

Other Stocks to Consider

Home Depot is not the only firm we are looking up to this earnings season. Our model shows that the following stocks have the right combination of elements to post an earnings beat this quarter:

Five Below Inc. (FIVE - Snapshot Report) has an Earnings ESP of +11.11% and a Zacks Rank #2 (Buy).

Citi Trends, Inc. (CTRN - Analyst Report) has an Earnings ESP of +2.33% and a Zacks Rank #2 (Buy).

Ross Stores Inc. (ROST - Analyst Report) has an Earnings ESP of +1.08% and a Zacks Rank #2 (Buy).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
TRIQUINT SE… TQNT 20.67 +6.55%
RF MICRO DE… RFMD 12.45 +5.87%
VASCO DATA… VDSI 14.82 +5.03%
PATTERSON-U… PTEN 34.56 +3.04%
STRATTEC SE… STRT 80.21 +2.97%