Home Depot (HD) Outpaces Stock Market Gains: What You Should Know

Home Depot (HD) closed at $228.82 in the latest trading session, marking a +1.88% move from the prior day. This change outpaced the S&P 500's 0.84% gain on the day. At the same time, the Dow added 0.92%, and the tech-heavy Nasdaq gained 1.06%.

Prior to today's trading, shares of the home-improvement retailer had gained 3.02% over the past month. This has lagged the Retail-Wholesale sector's gain of 3.8% and the S&P 500's gain of 3.95% in that time.

HD will be looking to display strength as it nears its next earnings release. On that day, HD is projected to report earnings of $2.10 per share, which would represent a year-over-year decline of 6.67%. Our most recent consensus estimate is calling for quarterly revenue of $25.76 billion, down 2.74% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $10.08 per share and revenue of $110.20 billion, which would represent changes of +1.92% and +1.85%, respectively, from the prior year.

Any recent changes to analyst estimates for HD should also be noted by investors. 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.

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 remained stagnant. HD currently has a Zacks Rank of #4 (Sell).

Looking at its valuation, HD is holding a Forward P/E ratio of 22.29. Its industry sports an average Forward P/E of 14.39, so we one might conclude that HD is trading at a premium comparatively.

Also, we should mention that HD has a PEG ratio of 1.98. 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. The Building Products - Retail was holding an average PEG ratio of 1.34 at yesterday's closing price.

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 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.

To follow HD in the coming trading sessions, be sure to utilize Zacks.com.

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