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Home Depot (HD) Gains But Lags Market: What You Should Know logo 3/29/2023

In the latest trading session, Home Depot (HD) closed at $283.36, marking a +0.9% move from the previous day. This change lagged the S&P 500's 1.42% gain on the day. At the same time, the Dow added 1%, and the tech-heavy Nasdaq gained 5.16%.

Heading into today, shares of the home-improvement retailer had lost 5.3% over the past month, lagging the Retail-Wholesale sector's loss of 0.41% and the S&P 500's gain of 0.27% in that time.

Wall Street will be looking for positivity from Home Depot as it approaches its next earnings report date. In that report, analysts expect Home Depot to post earnings of $3.86 per share. This would mark a year-over-year decline of 5.62%. Meanwhile, our latest consensus estimate is calling for revenue of $38.72 billion, down 0.48% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $15.85 per share and revenue of $157.22 billion, which would represent changes of -5.03% and -0.11%, respectively, from the prior year.

Investors might also notice 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. 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 0.33% lower. Home Depot is currently sporting a Zacks Rank of #4 (Sell).

Looking at its valuation, Home Depot is holding a Forward P/E ratio of 17.72. This represents a premium compared to its industry's average Forward P/E of 12.32.

Also, we should mention that HD has a PEG ratio of 1.58. 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. The Building Products - Retail industry currently had an average PEG ratio of 1.58 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 33, which puts it in the top 14% 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.

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