In the latest trading session, Home Depot (HD) closed at $405.76, marking a -0.36% move from the previous day. This move lagged the S&P 500’s daily loss of 0.1%. At the same time, the Dow lost 0.47%, and the tech-heavy Nasdaq lost 0.47%.

Prior to today’s trading, shares of the home-improvement retailer had lost 0.98% over the past month. This has lagged the Retail-Wholesale sector’s loss of 0.65% and the S&P 500’s gain of 3.67% in that time.

Wall Street will be looking for positivity from Home Depot as it approaches its next earnings report date. This is expected to be February 22, 2022. In that report, analysts expect Home Depot to post earnings of $3.22 per share. This would mark year-over-year growth of 17.52%. Meanwhile, our latest consensus estimate is calling for revenue of $34.68 billion, up 7.49% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $15.49 per share and revenue of $150.08 billion. These totals would mark changes of +28.76% and +13.6%, respectively, from last year.

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

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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. The Zacks Consensus EPS estimate remained stagnant within the past month. Home Depot is currently a Zacks Rank #1 (Strong Buy).

Valuation is also important, so investors should note that Home Depot has a Forward P/E ratio of 26.3 right now. Its industry sports an average Forward P/E of 14.87, so we one might conclude that Home Depot is trading at a premium comparatively.

Investors should also note that HD has a PEG ratio of 2.15 right now. 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. HD’s industry had an average PEG ratio of 1.86 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 2, putting it in the top 1% 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

https://www.nasdaq.com/articles/home-depot-hd-dips-more-than-broader-markets%3A-what-you-should-know