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

Zacks Equity Research

Home Depot (HD) closed the most recent trading day at $231.80, moving -0.45% from the previous trading session. This change lagged the S&P 500's 0.2% loss on the day. At the same time, the Dow added 0.04%, and the tech-heavy Nasdaq lost 0.13%.

Heading into today, shares of the home-improvement retailer had gained 0.53% over the past month, lagging the Retail-Wholesale sector's gain of 6.5% and the S&P 500's gain of 7.08% 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. In that report, analysts expect HD to post earnings of $2.52 per share. This would mark 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.

For the full year, our Zacks Consensus Estimates are projecting earnings of $10.12 per share and revenue of $110.71 billion, which would represent changes of +2.33% and +2.32%, 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. 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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate remained stagnant 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 23.02. This valuation marks a premium compared to its industry's average Forward P/E of 14.09.

Also, we should mention that HD has a PEG ratio of 2.31. 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 industry currently has a Zacks Industry Rank of 64, which puts it in the top 26% 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

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