Home Depot (HD) Gains As Market Dips: What You Should Know

In the latest trading session, Home Depot (HD) closed at $268.69, marking a +0.79% move from the previous day. This move outpaced the S&P 500's daily loss of 0.21%. Elsewhere, the Dow lost 0.43%, while the tech-heavy Nasdaq added 0.01%.

Prior to today's trading, shares of the home-improvement retailer had lost 10.04% over the past month. This has lagged the Retail-Wholesale sector's loss of 9.13% and the S&P 500's loss of 9.7% in that time.

Home Depot will be looking to display strength as it nears its next earnings release. On that day, Home Depot is projected to report earnings of $4.10 per share, which would represent year-over-year growth of 4.59%. Our most recent consensus estimate is calling for quarterly revenue of $37.9 billion, up 2.93% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $16.64 per share and revenue of $156.53 billion, which would represent changes of +7.15% and +3.56%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for Home Depot. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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. Over the past month, the Zacks Consensus EPS estimate has moved 0.5% higher. Home Depot is holding a Zacks Rank of #3 (Hold) right now.

Investors should also note Home Depot's current valuation metrics, including its Forward P/E ratio of 16.02. For comparison, its industry has an average Forward P/E of 7.59, which means Home Depot is trading at a premium to the group.

Also, we should mention that HD has a PEG ratio of 1.6. 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. The Building Products - Retail was holding an average PEG ratio of 1.6 at yesterday's closing price.

The Building Products - Retail industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 96, which puts it in the top 39% 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.

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

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