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

Home Depot (HD) closed the most recent trading day at $194.71, moving +1.26% from the previous trading session. The stock lagged the S&P 500's daily gain of 3.41%. Elsewhere, the Dow gained 3.44%, while the tech-heavy Nasdaq added 2.58%.

Heading into today, shares of the home-improvement retailer had lost 14.8% over the past month, lagging the Retail-Wholesale sector's loss of 5.26% and the S&P 500's loss of 10.46% in that time.

Investors will be hoping for strength from HD as it approaches its next earnings release, which is expected to be May 19, 2020. In that report, analysts expect HD to post earnings of $2.23 per share. This would mark a year-over-year decline of 1.76%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $27.08 billion, up 2.64% from the year-ago period.

HD's full-year Zacks Consensus Estimates are calling for earnings of $9.99 per share and revenue of $111.37 billion. These results would represent year-over-year changes of -2.54% and +1.04%, respectively.

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. 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. 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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 5.1% lower within the past month. HD is currently a Zacks Rank #3 (Hold).

Digging into valuation, HD currently has a Forward P/E ratio of 19.25. Its industry sports an average Forward P/E of 8.64, so we one might conclude that HD is trading at a premium comparatively.

Meanwhile, HD's PEG ratio is currently 1.75. 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 1.03 based on yesterday's closing prices.

The Building Products - Retail industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 91, which puts it in the top 36% 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.

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

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