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

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Home Depot (HD - Free Report) closed the most recent trading day at $329.48, moving +0.92% from the previous trading session. This change lagged the S&P 500's 1.05% gain on the day.

Prior to today's trading, shares of the home-improvement retailer had lost 1.17% over the past month. This has was narrower than the Retail-Wholesale sector's loss of 8.02% and the S&P 500's loss of 5.07% 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 $3.30 per share, which would represent year-over-year growth of 3.77%. Meanwhile, our latest consensus estimate is calling for revenue of $34.16 billion, up 1.87% from the prior-year quarter.

HD's full-year Zacks Consensus Estimates are calling for earnings of $14.46 per share and revenue of $144.97 billion. These results would represent year-over-year changes of +20.2% and +9.73%, respectively.

It is also important to note the recent changes to analyst estimates for HD. 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. 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 is currently sporting a Zacks Rank of #3 (Hold).

Digging into valuation, HD currently has a Forward P/E ratio of 22.59. This valuation marks a premium compared to its industry's average Forward P/E of 15.54.

It is also worth noting that HD currently has a PEG ratio of 2.33. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Building Products - Retail industry currently had an average PEG ratio of 1.81 as of yesterday's close.

The Building Products - Retail industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 12, putting it in the top 5% 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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