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Home Depot (HD) Gains But Lags Market: What You Should Know

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Home Depot (HD - Free Report) closed the most recent trading day at $181.14, moving +1.41% from the previous trading session. This change lagged the S&P 500's 2.28% gain on the day. At the same time, the Dow added 2.24%, and the tech-heavy Nasdaq gained 1.72%.

Prior to today's trading, shares of the home-improvement retailer had lost 25.9% over the past month. This has lagged the Retail-Wholesale sector's loss of 10% and the S&P 500's loss of 16.08% in that time.

Investors will be hoping for strength from HD as it approaches its next earnings release, which is expected to be May 19, 2020. The company is expected to report EPS of $2.30, up 1.32% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $27.17 billion, up 2.98% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $10.16 per share and revenue of $113.26 billion, which would represent changes of -0.88% and +2.75%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for HD. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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 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. Over the past month, the Zacks Consensus EPS estimate has moved 3.47% lower. HD is currently sporting a Zacks Rank of #3 (Hold).

In terms of valuation, HD is currently trading at a Forward P/E ratio of 17.58. Its industry sports an average Forward P/E of 8.07, so we one might conclude that HD is trading at a premium comparatively.

It is also worth noting that HD currently has a PEG ratio of 1.6. 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 0.77 based on yesterday's closing prices.

The Building Products - Retail industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 101, which puts it in the top 40% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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