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

Zacks Equity Research
·3-min read

Home Depot (HD) closed the most recent trading day at $286.04, moving +0.81% from the previous trading session. This change outpaced the S&P 500's 0.47% gain on the day. Elsewhere, the Dow gained 0.4%, while the tech-heavy Nasdaq added 0.33%.

Prior to today's trading, shares of the home-improvement retailer had gained 4.18% over the past month. This has lagged the Retail-Wholesale sector's gain of 7.48% and outpaced the S&P 500's gain of 3.42% in that time.

HD will be looking to display strength as it nears its next earnings release, which is expected to be November 17, 2020. In that report, analysts expect HD to post earnings of $2.97 per share. This would mark year-over-year growth of 17.39%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $31.41 billion, up 15.38% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $11.36 per share and revenue of $125.59 billion, which would represent changes of +10.83% and +13.94%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for HD. These revisions help to show the ever-changing nature of near-term business trends. 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. 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 has moved 0.13% higher. HD currently has a Zacks Rank of #3 (Hold).

In terms of valuation, HD is currently trading at a Forward P/E ratio of 24.97. This valuation marks a premium compared to its industry's average Forward P/E of 20.44.

Investors should also note that HD has a PEG ratio of 2.36 right now. 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 1.24 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 106, putting it in the top 42% 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.

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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