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

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In the latest trading session, Home Depot (HD - Free Report) closed at $204.09, marking a +1.73% move from the previous day. This move lagged the S&P 500's daily gain of 2.29%. Elsewhere, the Dow gained 1.99%, while the tech-heavy Nasdaq added 2.81%.

Coming into today, shares of the home-improvement retailer had gained 8.6% in the past month. In that same time, the Retail-Wholesale sector gained 20.95%, while the S&P 500 gained 19.13%.

HD will be looking to display strength as it nears its next earnings release, which is expected to be May 19, 2020. On that day, HD is projected to report earnings of $2.25 per share, which would represent a year-over-year decline of 0.88%. Our most recent consensus estimate is calling for quarterly revenue of $27.39 billion, up 3.84% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $9.86 per share and revenue of $111.72 billion. These totals would mark changes of -3.8% and +1.36%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for HD. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for 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 5.6% lower within the past month. 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 20.35. This valuation marks a premium compared to its industry's average Forward P/E of 13.28.

Investors should also note that HD has a PEG ratio of 1.85 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Building Products - Retail stocks are, on average, holding a PEG ratio of 1.46 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 162, which puts it in the bottom 37% 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.

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


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