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

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Home Depot (HD - Free Report) closed the most recent trading day at $236.24, moving +0.9% from the previous trading session. The stock outpaced the S&P 500's daily gain of 0.33%. At the same time, the Dow added 0.43%, and the tech-heavy Nasdaq gained 0.33%.

Prior to today's trading, shares of the home-improvement retailer had gained 1.32% over the past month. This has lagged the Retail-Wholesale sector's gain of 2.33% and the S&P 500's gain of 2.66% in that time.

Wall Street will be looking for positivity from HD as it approaches its next earnings report date. This is expected to be November 19, 2019. The company is expected to report EPS of $2.52, up 0.4% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $27.48 billion, up 4.46% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $10.12 per share and revenue of $110.71 billion. These totals would mark changes of +2.33% and +2.32%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for HD. 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.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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.

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. The Zacks Consensus EPS estimate has moved 0.03% higher within the past month. HD currently has a Zacks Rank of #2 (Buy).

Digging into valuation, HD currently has a Forward P/E ratio of 23.15. This valuation marks a premium compared to its industry's average Forward P/E of 14.35.

Investors should also note that HD has a PEG ratio of 2.33 right now. 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 1.39 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 33, putting it in the top 13% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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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