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

Home Depot (HD) closed the most recent trading day at $193.58, moving +1.26% from the previous trading session. This change lagged the S&P 500's 2.15% gain on the day. Meanwhile, the Dow gained 2.17%, and the Nasdaq, a tech-heavy index, added 2.89%.

Coming into today, shares of the home-improvement retailer had lost 8.27% in the past month. In that same time, the Retail-Wholesale sector lost 9.79%, while the S&P 500 lost 5.16%.

Wall Street will be looking for positivity from HD as it approaches its next earnings report date. This is expected to be November 13, 2018. In that report, analysts expect HD to post earnings of $2.28 per share. This would mark year-over-year growth of 23.91%. Our most recent consensus estimate is calling for quarterly revenue of $26.26 billion, up 4.93% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $9.57 per share and revenue of $108.29 billion. These totals would mark changes of +28.28% and +7.32%, respectively, from last year.

Any recent changes to analyst estimates for HD should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an 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. Over the past month, the Zacks Consensus EPS estimate has moved 0.01% lower. HD currently has a Zacks Rank of #4 (Sell).

Digging into valuation, HD currently has a Forward P/E ratio of 19.97. Its industry sports an average Forward P/E of 14.75, so we one might conclude that HD is trading at a premium comparatively.

It is also worth noting that HD currently has a PEG ratio of 1.51. 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 1.39 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 217, which puts it in the bottom 15% 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.

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

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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