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Home Depot to post fourth-quarter results February 21

What's Happening

Home improvement retailer Home Depot ( HD ) will report its fourth-quarter results before the market open on February 21. Analysts expect the company to report earnings of $1.32 per share, on revenue of $21.73 billion. HD shares have risen 5.4% on the year.

Technical Analysis

HD was recently trading at $141.54, down $1.45 from its 12-month high and $22.79 above its 12-month low. Overall technical indicators for HD are bullish and the stock is a strong upward trend. The stock has recent support above $136.50, and recent resistance below $143.00. Of the 20 analysts who cover the stock, 11 rate it a "strong buy", one rates it a "buy", seven rate it a "hold", and one rates it a "strong sell". The stock receives S&P Capital IQ's 4 STARS "Buy" ranking.

Analyst's Thoughts

The housing market remains on track, and while the Federal Reserve is expected to make more interest rate hikes this year, rates should remain low enough to prevent a resulting housing crash. As the housing market has improved, home improvement retailers have flourished, and Home Depot's recent performance has helped drive the stock to record highs. The company posted better-than-expected earnings and revenue last quarter, and another solid report should push shares to a new record high. Analysts call for earnings of $1.33 per share, but the Street has a slightly higher whisper number of $1.34, which is what the market is going to want to see for shares to trend higher after the report. The company will also likely announce a dividend increase. The stock currently has a 1.94% yield, and the company has boosted its dividend for four straight years, usually in conjunction with its fourth-quarter report. The stock has a P/E of 23, and with earnings forecast to rise 17.6% this year, and 12.9% next year, there remains plenty of upside potential barring an earnings miss.

Stock Only Trade

Bullish Trade

If you want a bullish hedged trade on the stock, consider a May 120/125 bull-put credit spread for a 30-cent credit. That's a potential 6.4% return (25.6% annualized*) and the stock would have to fall 11.5% to cause a problem.

Bearish Trade

If you want to take a bearish stance on the stock at this time, consider a May 155/160 bear-call credit spread for a 40-cent credit. That's a potential 8.7% return (34.9% annualized*) and the stock would have to rise 9.8% to cause a problem.

Covered Call Trade

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

Originally published on InvestorsObserver.com


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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