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Home Depot (HD) Dips More Than Broader Markets: What You Should Know

In the latest trading session, Home Depot (HD) closed at $323.96, marking a -0.88% move from the previous day. This change lagged the S&P 500's 0.68% loss on the day.

Heading into today, shares of the home-improvement retailer had gained 13.48% over the past month, outpacing the Retail-Wholesale sector's gain of 0.87% and the S&P 500's gain of 6.62% in that time.

Investors will be hoping for strength from HD as it approaches its next earnings release, which is expected to be May 18, 2021. The company is expected to report EPS of $2.84, up 36.54% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $33.38 billion, up 18.12% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $12.60 per share and revenue of $135.24 billion, which would represent changes of +4.74% and +2.37%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for HD. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for 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.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.36% higher. HD is currently a Zacks Rank #3 (Hold).

In terms of valuation, HD is currently trading at a Forward P/E ratio of 26.05. Its industry sports an average Forward P/E of 17.81, so we one might conclude that HD is trading at a premium comparatively.

Also, we should mention that HD has a PEG ratio of 2.5. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Building Products - Retail stocks are, on average, holding a PEG ratio of 1.7 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 95, which puts it in the top 38% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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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