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

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Home Depot (HD - Free Report) closed the most recent trading day at $302.30, moving +0.82% from the previous trading session. This change outpaced the S&P 500's 0.59% gain on the day. Meanwhile, the Dow gained 0.15%, and the Nasdaq, a tech-heavy index, lost 0.02%.

Heading into today, shares of the home-improvement retailer had gained 11.38% over the past month, outpacing the Retail-Wholesale sector's gain of 8.9% and the S&P 500's gain of 7.25% in that time.

Home Depot will be looking to display strength as it nears its next earnings release, which is expected to be August 16, 2022. The company is expected to report EPS of $4.94, up 9.05% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $43.32 billion, up 5.36% from the prior-year quarter.

HD's full-year Zacks Consensus Estimates are calling for earnings of $16.47 per share and revenue of $155.8 billion. These results would represent year-over-year changes of +6.05% and +3.07%, respectively.

It is also important to note the recent changes to analyst estimates for Home Depot. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. Home Depot currently has a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that Home Depot has a Forward P/E ratio of 18.2 right now. Its industry sports an average Forward P/E of 8.79, so we one might conclude that Home Depot is trading at a premium comparatively.

Also, we should mention that HD has a PEG ratio of 1.8. 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 1.8 as of yesterday's close.

The Building Products - Retail industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 149, which puts it in the bottom 41% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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