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

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Home Depot (HD - Free Report) closed at $232.20 in the latest trading session, marking a -1.16% move from the prior day. This move lagged the S&P 500's daily loss of 0.12%. Elsewhere, the Dow gained 0.11%, while the tech-heavy Nasdaq added 0.02%.

Coming into today, shares of the home-improvement retailer had gained 3.61% in the past month. In that same time, the Retail-Wholesale sector gained 2.92%, while the S&P 500 gained 4.42%.

Investors will be hoping for strength from HD as it approaches its next earnings release, which is expected to be November 19, 2019. On that day, HD is projected to report earnings of $2.52 per share, which would represent year-over-year growth of 0.4%. 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.

Any recent changes to analyst estimates for HD should also be noted by investors. 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.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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 ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.03% higher within the past month. HD is currently a Zacks Rank #2 (Buy).

Investors should also note HD's current valuation metrics, including its Forward P/E ratio of 23.23. For comparison, its industry has an average Forward P/E of 14.55, which means HD is trading at a premium to the group.

We can also see that HD currently has a PEG ratio of 2.33. 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. HD's industry had an average PEG ratio of 1.41 as of yesterday's close.

The Building Products - Retail industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 43, putting it in the top 17% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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