The Home Depot, Inc. (HD) is Attracting Investor Attention: Here is What You Should Know

Home Depot's stock has declined 7.5% in the past month, underperforming the S&P 500 and its industry, while analysts' earnings estimates show mixed revisions; the current quarter's EPS is projected to increase 0.9% year-over-year to $4.71, but the current fiscal year's EPS is expected to decrease by 1.3% to $15.04 before rebounding with a 9.2% increase to $16.41 in the next fiscal year. Revenue estimates suggest growth, with a 5.4% increase expected for the current quarter and approximately 3-4% growth for the current and next fiscal years, leading to a Zacks Rank #3 (Hold), indicating near-term performance in line with the broader market.

Analysis

Home Depot (HD) has recently garnered significant investor interest despite its shares underperforming, returning -7.5% over the past month compared to the S&P 500 composite's +0.6% gain and its Zacks Retail - Home Furnishings industry's 8.6% loss. Current earnings estimates for Home Depot project earnings of $4.71 per share for the current quarter, a modest +0.9% year-over-year increase, with the Zacks Consensus Estimate having risen +0.4% in the last 30 days. However, for the current fiscal year, the consensus earnings estimate of $15.04 indicates a -1.3% decline from the prior year, with this estimate slightly decreasing by -0.1% over the past month. A more positive outlook is forecasted for the next fiscal year, with consensus earnings estimated at $16.41, representing a significant +9.2% year-over-year growth, although this estimate has seen a -0.7% downward revision in the past month. Revenue growth is anticipated, with the consensus sales estimate for the current quarter at $45.51 billion (+5.4% YoY), and full-year estimates at $164.45 billion (+3.1% YoY) for the current fiscal year and $171.66 billion (+4.4% YoY) for the next. In its last reported quarter, Home Depot's revenues of $39.86 billion (+9.4% YoY) surpassed the Zacks Consensus Estimate by +1.15%, though its EPS of $3.56 (-1.9% YoY) missed estimates by -0.84%. Notably, the company has topped consensus revenue estimates in each of the last four quarters and surpassed EPS estimates three times during the same period. The stock currently holds a Zacks Rank #3 (Hold), suggesting it may perform in line with the broader market, and its Zacks Value Style Score of C indicates it is trading at par with its peers.

Key Decisions for Investors

• Given Home Depot's recent -7.5% share price decline and its Zacks Rank #3 (Hold), investors might consider maintaining current positions, as near-term performance is expected to align with the broader market.
• Evaluate the mixed earnings outlook, with a slight current quarter EPS growth of +0.9% and a current fiscal year decline of -1.3%, against a more robust projected +9.2% EPS growth for the next fiscal year and consistent revenue growth forecasts.
• Note that while Home Depot has a strong history of beating revenue estimates, the recent EPS miss and slight downward revisions in full-year and next-year EPS estimates warrant monitoring future earnings reports closely before making significant investment changes, especially as its valuation is considered at par with peers.