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

Zacks Equity Research

Home Depot (HD) closed at $207.94 in the latest trading session, marking a +0.22% move from the prior day. This change lagged the S&P 500's 0.3% gain on the day. Elsewhere, the Dow gained 0.15%, while the tech-heavy Nasdaq added 0.42%.

Heading into today, shares of the home-improvement retailer had gained 8.37% over the past month, outpacing the Retail-Wholesale sector's gain of 2.42% and the S&P 500's gain of 2.2% in that time.

HD will be looking to display strength as it nears its next earnings release. In that report, analysts expect HD to post earnings of $3.09 per share. This would mark year-over-year growth of 1.31%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $30.97 billion, up 1.65% from the year-ago period.

HD's full-year Zacks Consensus Estimates are calling for earnings of $10.10 per share and revenue of $111.28 billion. These results would represent year-over-year changes of +2.12% and +2.84%, respectively.

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. 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 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. Within the past 30 days, our consensus EPS projection has moved 0.2% higher. HD is currently sporting a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that HD has a Forward P/E ratio of 20.54 right now. Its industry sports an average Forward P/E of 12.66, so we one might conclude that HD is trading at a premium comparatively.

We can also see that HD currently has a PEG ratio of 1.91. 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 1.26 based on yesterday's closing prices.

The Building Products - Retail industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 71, 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.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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