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

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Home Depot (HD - Free Report) closed at $265.70 in the latest trading session, marking a -0.32% move from the prior day. This move lagged the S&P 500's daily gain of 0.3%. Meanwhile, the Dow gained 0.2%, and the Nasdaq, a tech-heavy index, added 0.37%.

Heading into today, shares of the home-improvement retailer had lost 8.69% over the past month, lagging the Retail-Wholesale sector's loss of 3.71% and the S&P 500's loss of 5.02% in that time.

Investors will be hoping for strength from HD as it approaches its next earnings release. On that day, HD is projected to report earnings of $2.96 per share, which would represent year-over-year growth of 17%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $31.32 billion, up 15.05% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $11.35 per share and revenue of $125.45 billion. These totals would mark changes of +10.73% and +13.82%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for HD. 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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an 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. The Zacks Consensus EPS estimate has moved 0.41% higher within the past month. 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 23.49. Its industry sports an average Forward P/E of 17.48, so we one might conclude that HD is trading at a premium comparatively.

It is also worth noting that HD currently has a PEG ratio of 2.01. 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. The Building Products - Retail industry currently had an average PEG ratio of 1.15 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 26, putting it in the top 11% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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