Industrial Products is currently one of the favored sectors — occupying the fourth position — among the 16 Zacks sectors. It yielded 3.8% return in the past six months.
Notably, the sector’s earnings are predicted to increase 24.2% in 2018 on revenue growth of 9.6%. For the third quarter, earnings and sales are anticipated to improve 18.5% and 7.6% year over year, respectively. Among many indicators, few supporting the sector’s growth are discussed below:
Prospering global economy and solid prospects in the U.S. economy are the key drivers of the sector. Also, expanding industrial production, rising demand for U.S.-made machinery and government’s favorable tax policy changes (implemented in December 2017) are favorable factors.
Investors interested in gaining exposure in the sector may choose stocks that have Zacks Rank #1 (Strong Buy) or #2 (Buy). Of many investment-friendly options, we believe that adding HD Supply Holdings, Inc. (HDS - Free Report) to the portfolio is a smart choice. The stock currently carries a Zacks Rank #2 and has a favorable VGM Score of B. In the past six months, the company’s shares have outperformed the sector, having yielded 9.2% return.
Also, the company’s industry is positioned in the top 40% of more than 250 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Let’s delve deeper and discuss why HD Supply is a suitable investment option.
Bottom-Line Performance & Projections: HD Supply’s financial performance has outperformed expectations in the last four quarters, with an average positive earnings surprise of 8.07%. The average includes the impact of 3.13% earnings beat recorded in the second quarter of fiscal 2018 (ended Jul 29, 2018). On a year-over-year basis, the company’s bottom line in the fiscal second quarter surged 54.7% on the back of healthy segmental businesses.
For the third quarter of fiscal 2018 (ending October 2018), HD Supply anticipates adjusted earnings within 95 cents to $1.00 per share. This projection represents growth of roughly 19-25% from the year-ago quarter’s tally of 80 cents.
For fiscal 2018 (ending January 2019), the company predicts adjusted earnings per share in the range of $3.22-$3.35. At the mid-point, the projection reflects year-over-year growth of 42% from the year-ago quarter’s tally.
Driven by solid performance and impressive outlook, the company’s earnings estimates have increased in the past 60 days. Currently, the Zack Consensus Estimate for earnings is pegged at $3.30 for fiscal 2018 and $3.27 for fiscal 2019 (ending January 2020), reflecting growth of 1.5% and 2.2% from the respective 60-day-ago tallies.
HD Supply Holdings, Inc. Price and Consensus