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

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In the latest trading session, Home Depot (HD - Free Report) closed at $270.74, marking a +1.51% move from the previous day. This move outpaced the S&P 500's daily gain of 1.23%. Meanwhile, the Dow gained 1.6%, and the Nasdaq, a tech-heavy index, added 0.42%.

Coming into today, shares of the home-improvement retailer had lost 3.93% in the past month. In that same time, the Retail-Wholesale sector lost 1.85%, while the S&P 500 lost 2.51%.

Wall Street will be looking for positivity from HD as it approaches its next earnings report date. This is expected to be November 17, 2020. The company is expected to report EPS of $3, up 18.58% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $31.44 billion, up 15.49% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $11.43 per share and revenue of $125.72 billion, which would represent changes of +11.51% and +14.05%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for HD. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.69% higher. HD is holding a Zacks Rank of #3 (Hold) right now.

Investors should also note HD's current valuation metrics, including its Forward P/E ratio of 23.34. Its industry sports an average Forward P/E of 18.65, 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 2.05. 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. Building Products - Retail stocks are, on average, holding a PEG ratio of 1.14 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 55, which puts it in the top 22% 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.

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


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