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

Zacks Equity Research
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Home Depot (HD) closed the most recent trading day at $191.85, moving -0.25% from the previous trading session. This move lagged the S&P 500's daily gain of 0.18%. Elsewhere, the Dow gained 0.24%, while the tech-heavy Nasdaq added 0.03%.

Heading into today, shares of the home-improvement retailer had gained 8.59% over the past month, outpacing the Retail-Wholesale sector's gain of 3.11% and the S&P 500's gain of 4.28% in that time.

Investors will be hoping for strength from HD as it approaches its next earnings release, which is expected to be February 26, 2019. In that report, analysts expect HD to post earnings of $2.16 per share. This would mark year-over-year growth of 27.81%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $26.56 billion, up 11.2% from the year-ago period.

Investors should also note any recent changes to analyst estimates for HD. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

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.

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 has moved 0.09% lower. HD currently has a Zacks Rank of #3 (Hold).

In terms of valuation, HD is currently trading at a Forward P/E ratio of 18.85. This valuation marks a premium compared to its industry's average Forward P/E of 12.01.

Also, we should mention that HD has a PEG ratio of 1.46. 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 1.1 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 179, which puts it in the bottom 30% 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 Zacks.com.


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