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Home Depot (HD) Dips More Than Broader Markets: What You Should Know

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In the latest trading session, Home Depot (HD - Free Report) closed at $199.63, marking a -0.46% move from the previous day. This move lagged the S&P 500's daily loss of 0.45%. Meanwhile, the Dow lost 0.25%, and the Nasdaq, a tech-heavy index, lost 0.5%.

Coming into today, shares of the home-improvement retailer had gained 0.05% in the past month. In that same time, the Retail-Wholesale sector gained 4.73%, while the S&P 500 gained 2.62%.

Wall Street will be looking for positivity from HD as it approaches its next earnings report date. This is expected to be May 21, 2019. The company is expected to report EPS of $2.19, up 5.29% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $26.42 billion, up 5.92% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $10.09 per share and revenue of $111.38 billion. These totals would mark changes of +2.02% and +2.93%, respectively, from last 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. Over the past month, the Zacks Consensus EPS estimate has moved 0.01% higher. HD currently has a Zacks Rank of #3 (Hold).

Investors should also note HD's current valuation metrics, including its Forward P/E ratio of 19.88. This represents a premium compared to its industry's average Forward P/E of 14.79.

Also, we should mention that HD has a PEG ratio of 1.74. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Building Products - Retail stocks are, on average, holding a PEG ratio of 1.31 based on yesterday's closing prices.

The Building Products - Retail industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 100, putting it in the top 40% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. 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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