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

In the latest trading session, Home Depot (HD) closed at $224.22, marking a -0.43% move from the previous day. This change lagged the S&P 500's daily loss of 0.29%. Elsewhere, the Dow lost 0.46%, while the tech-heavy Nasdaq lost 0.27%.

Coming into today, shares of the home-improvement retailer had gained 6.2% in the past month. In that same time, the Retail-Wholesale sector gained 5.03%, while the S&P 500 gained 4.56%.

Investors will be hoping for strength from HD as it approaches its next earnings release. The company is expected to report EPS of $2.10, down 6.67% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $25.76 billion, down 2.74% from the year-ago period.

HD's full-year Zacks Consensus Estimates are calling for earnings of $10.08 per share and revenue of $110.20 billion. These results would represent year-over-year changes of +1.92% and +1.85%, respectively.

Investors might also notice recent changes to analyst estimates for HD. These revisions typically reflect the latest short-term business trends, which can change frequently. 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. 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. Within the past 30 days, our consensus EPS projection has moved 0.04% higher. HD currently has a Zacks Rank of #4 (Sell).

In terms of valuation, HD is currently trading at a Forward P/E ratio of 22.35. Its industry sports an average Forward P/E of 14.45, so we one might conclude that HD is trading at a premium comparatively.

Also, we should mention that HD has a PEG ratio of 1.99. 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. The Building Products - Retail industry currently had an average PEG ratio of 1.31 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 69, putting it in the top 28% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.

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