How Much Upside Is Left in Home Depot Stock?

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How Much Upside Is Left in Home Depot Stock? PART 1 OF 5

What’s Driving Home Depot Stock?

HD stock performance

After Home Depot (HD) posted its 2Q17 earnings on August 16, 2017, the stock fell to $147.49 by August 18, 2017. Although its 2Q17 earnings and revenue beat analysts’ estimates, the stock fell most likely due to the fear of Amazon’s (AMZN) entry into the appliance sector.

What&#8217;s Driving Home Depot Stock?

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But since then, HD stock has been on an upward momentum. As of September 11, 2017, Home Depot was trading at $158.37, which represents a rise of 7.4% from August 18, 2017. Investors are expecting Home Depot’s sales to improve due to recovery efforts after the devastations caused by Hurricanes Harvey and Irma.

Home Depot has 8.0% of its stores in Florida, which was severely affected by Hurricane Irma, and 9.0% of its stores in Texas, which is recovering from Hurricane Harvey.

Year-to-date performance

It’s been a good year for Home Depot so far, with its stock rising 18.1% since the beginning of the year. During the same period, Lowe’s Companies (LOW) stock has risen 9.0%, and Williams-Sonoma (WSM) and Bed Bath & Beyond (BBBY) have fallen 1.6% and 31.9%, respectively.

The SPDR Dow Jones Industrial Average ETF (DIA) and the S&P 500 Index (SPX-INDEX), the broader comparative indexes, have returned 11.8% and 11.1%, respectively, year-to-date. DIA has approximately 42.0% of its investments in home improvement retailers.

In this series, we’ll cover analysts’ revenue and EPS (earnings per share) estimates for the next four quarters. We’ll also look at analysts’ recommendations and Home Depot’s valuation multiple. Let’s start by looking at analysts’ revenue estimates.


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