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Home Depot (HD) Looks Promising: What's Driving the Stock?
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The Home Depot, Inc. (HD - Free Report) looks quite attractive, given its robust fundamentals, superb earnings history and positive estimate revisions. Notably, these factors have helped this home improvement retailer’s shares to grow 2.4% year to date, when the Zacks categorized Building Products – Retail/Wholesale industry slipped 1.3%. That said, let’s delve deeper into the factors behind Home Depot’s outperformance.
What’s Driving Home Depot?
Home Depot has been implementing several initiatives to drive long-term growth. In response to the evolving retail environment, where digital and physical stores go hand in hand, the company remains keen on building its interconnected capabilities. To do this, Home Depot is constantly investing in content, developing its website and improving mobile experience to enhance customer experience.
Further, this leading player in the highly-fragmented home improvement industry has been revamping itself by concentrating on square footage growth and maximizing 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.
We expect these initiatives will drive the company’s top-line and bottom-line growth in the long run. In fact, the company is already gaining from its consistent focus on improving customer experience, solid execution and constant housing market recovery. This is well evident from its past performance.
Home Depot has been reporting strong financial figures since 2008, with steady improvement in revenues, earnings per share (EPS) and net income. The company retained its four-year long trend of consistently beating earnings estimates, by delivering a positive earnings surprise in third-quarter fiscal 2016. Additionally, the company’s top line was ahead of estimates and grew year over year.
Moreover, the company raised its fiscal 2016 earnings growth guidance following sturdy results. This also led to an upward revision in the Zacks Consensus Estimate, over the past 60 days, as analysts become constructive on the stock’s future performance.
However, intense competition and a soft economic recovery may prove deterrents, pushing back home improvement projects. Also, Home Depot’s significant exposure to international markets makes it vulnerable to currency headwinds – posing concerns for the company.
Nonetheless, all aforementioned growth drivers inspire optimism about Home Depot’s future performance. Also, its disciplined capital allocation strategy focused on making investments to develop its business while using the excess cash to enhance shareholder returns through dividend payouts and share buybacks, should draw investors’ attention.
Children's Place has an average positive earnings surprise of 36.3% in the trailing four quarters. The stock, with a long-term growth rate of 10.3%, has seen positive estimate revisions in the last 30 days.
Tilly's, with a long-term EPS growth rate of 15.5%, has topped earnings consecutively in the last three quarters. Moreover, the company’s positive estimate revisions for the current fiscal over the past 30 days, bodes well.
Zumiez’s long-term EPS growth rate of 15% and solid positive estimate revisions for the current fiscal over the past 30 days help it to stand strong in the industry. Moreover, the company has delivered positive earnings surprises consistently in the trailing four quarters, with an average beat of 30.9%.
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How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>
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Home Depot (HD) Looks Promising: What's Driving the Stock?
The Home Depot, Inc. (HD - Free Report) looks quite attractive, given its robust fundamentals, superb earnings history and positive estimate revisions. Notably, these factors have helped this home improvement retailer’s shares to grow 2.4% year to date, when the Zacks categorized Building Products – Retail/Wholesale industry slipped 1.3%. That said, let’s delve deeper into the factors behind Home Depot’s outperformance.
What’s Driving Home Depot?
Home Depot has been implementing several initiatives to drive long-term growth. In response to the evolving retail environment, where digital and physical stores go hand in hand, the company remains keen on building its interconnected capabilities. To do this, Home Depot is constantly investing in content, developing its website and improving mobile experience to enhance customer experience.
Further, this leading player in the highly-fragmented home improvement industry has been revamping itself by concentrating on square footage growth and maximizing 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.
We expect these initiatives will drive the company’s top-line and bottom-line growth in the long run. In fact, the company is already gaining from its consistent focus on improving customer experience, solid execution and constant housing market recovery. This is well evident from its past performance.
Home Depot has been reporting strong financial figures since 2008, with steady improvement in revenues, earnings per share (EPS) and net income. The company retained its four-year long trend of consistently beating earnings estimates, by delivering a positive earnings surprise in third-quarter fiscal 2016. Additionally, the company’s top line was ahead of estimates and grew year over year.
HOME DEPOT Price and Consensus
HOME DEPOT Price and Consensus | HOME DEPOT Quote
Moreover, the company raised its fiscal 2016 earnings growth guidance following sturdy results. This also led to an upward revision in the Zacks Consensus Estimate, over the past 60 days, as analysts become constructive on the stock’s future performance.
However, intense competition and a soft economic recovery may prove deterrents, pushing back home improvement projects. Also, Home Depot’s significant exposure to international markets makes it vulnerable to currency headwinds – posing concerns for the company.
Nonetheless, all aforementioned growth drivers inspire optimism about Home Depot’s future performance. Also, its disciplined capital allocation strategy focused on making investments to develop its business while using the excess cash to enhance shareholder returns through dividend payouts and share buybacks, should draw investors’ attention.
Zacks Rank & Key Picks
Home Depot currently carries a Zacks Rank #3 (Hold). Some better-ranked retail stocks include The Children's Place, Inc. (PLCE - Free Report) , Tilly's, Inc. (TLYS - Free Report) and Zumiez Inc. (ZUMZ - Free Report) , each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Children's Place has an average positive earnings surprise of 36.3% in the trailing four quarters. The stock, with a long-term growth rate of 10.3%, has seen positive estimate revisions in the last 30 days.
Tilly's, with a long-term EPS growth rate of 15.5%, has topped earnings consecutively in the last three quarters. Moreover, the company’s positive estimate revisions for the current fiscal over the past 30 days, bodes well.
Zumiez’s long-term EPS growth rate of 15% and solid positive estimate revisions for the current fiscal over the past 30 days help it to stand strong in the industry. Moreover, the company has delivered positive earnings surprises consistently in the trailing four quarters, with an average beat of 30.9%.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>