Back to top

Image: Bigstock

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

Read MoreHide Full Article

Home Depot (HD - Free Report) closed the most recent trading day at $389.40, moving +0.71% from the previous trading session. This change outpaced the S&P 500's 0.28% gain on the day. Meanwhile, the Dow gained 0.11%, and the Nasdaq, a tech-heavy index, added 0.14%.

Prior to today's trading, shares of the home-improvement retailer had lost 3.86% over the past month. This has lagged the Retail-Wholesale sector's loss of 3.84% and the S&P 500's gain of 0.12% in that time.

Investors will be hoping for strength from Home Depot as it approaches its next earnings release, which is expected to be February 22, 2022. The company is expected to report EPS of $3.22, up 17.52% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $34.68 billion, up 7.49% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $15.49 per share and revenue of $150.08 billion, which would represent changes of +28.76% and +13.6%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for Home Depot. These recent revisions tend to reflect the evolving nature of short-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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. Home Depot is currently a Zacks Rank #1 (Strong Buy).

In terms of valuation, Home Depot is currently trading at a Forward P/E ratio of 24.97. Its industry sports an average Forward P/E of 12.56, so we one might conclude that Home Depot is trading at a premium comparatively.

Also, we should mention that HD has a PEG ratio of 2.04. 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 was holding an average PEG ratio of 1.79 at yesterday's closing price.

The Building Products - Retail industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 3, which puts it in the top 2% 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.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


The Home Depot, Inc. (HD) - free report >>

Published in