Home Depot Stock Up 10% in 3 Months: Is Holding Still the Best Move?

Shares of The Home Depot, Inc. HD, a prominent player in the home improvement sector, have witnessed a decent run on the bourses, climbing nearly 10.4% over the past three months. This steady rise has prompted investors to investigate whether the stock still has room to run or if it’s time to lock in gains.Resilient demand from professional contractors, ongoing productivity initiatives and disciplined capital allocation have underpinned the recent strength. Home Depot’s ability to balance growth investments with shareholder returns has kept it in focus, even as the broader home improvement market navigates changing market dynamics.Home Depot closed at $407.71 yesterday, trailing the industry’s 11.9% gain but outperforming the S&P 500 and the Retail-Wholesale sector, which rose 8.8% and 5.9%, respectively, over the same period.Home Depot Stock 3-Month PerformanceImage Source: Zacks Investment ResearchCompared with its peers, Home Depot has outperformed Floor & Decor Holdings, Inc. FND but trailed Lowe's Companies, Inc. LOW and FGI Industries Ltd. FGI. Over the past three months, shares of Floor & Décor, Lowe’s, and FGI Industries have advanced 8.3%, 14.6% and 19.4%, respectively.Even so, Home Depot remains technically strong. The stock is trading above both its 50-day and 200-day moving averages, a sign of sustained momentum and price stability.HD Stock Trades Above 50 &200-Day Moving Averages Image Source: Zacks Investment ResearchA Sneak Peek Into Home Depot StockHome Depot continues to present itself as a compelling investment opportunity, driven by its market-leading position and ability to effectively serve both DIY customers and professional contractors. Management’s decision to reaffirm its full-year outlook despite a mixed macro backdrop demonstrates confidence in both near-term demand trends and the company’s long-term growth trajectory. For fiscal 2025, Home Depot expects total sales growth of about 2.8% on a 52-week basis, comparable sales growth of roughly 1% and an adjusted operating margin of 13.4%. The company also plans to open around 13 new stores during the year, showing that capital is being deployed toward both expansion and operational improvements.A key factor supporting the bullish case is the improving sales momentum through the most recent quarter. Second-quarter sales rose 4.9% year over year to $45.3 billion, with 1% growth in overall comparable sales and 1.4% in the United States. Monthly comps moved from a 0.3% decline in May to a 3.1% gain in July, signaling improving consumer engagement and setting a positive tone for the remainder of the fiscal year. Twelve of the sixteen merchandise categories posted positive comparable sales growth, with strength in building materials, appliances, garden supplies, plumbing and electrical. Big-ticket comp transactions above $1,000 also grew 2.6%, while the average ticket size rose 1.4%.Home Depot’s digital transformation is another pillar of its growth strategy. Online comparable sales climbed about 12% in the quarter, driven by faster same-day and next-day delivery capabilities and enhanced digital tools such as AI-powered search and “buy-it-again” functionality. These initiatives are boosting customer satisfaction and engagement, with management noting that customers using these services have demonstrated a double-digit increase in spending and purchase frequency. This strong digital adoption is supporting Home Depot’s efforts to build a seamless omnichannel shopping experience and improve productivity across its network.The professional, or Pro, customer segment continues to be a major growth driver. Several thousand Pro customers are now using Home Depot’s trade credit facilities, with spending levels rising by double digits after activation. The SRS acquisition, completed a year ago, is already exceeding expectations in both growth and synergy realization, while the pending GMS acquisition will add more than 1,200 locations, 3,500 sales associates and nearly 8,000 delivery trucks capable of handling tens of thousands of job-site deliveries each day. These efforts are strengthening Home Depot’s leadership in specialty distribution and enabling capital-light growth through a wider network of distribution centers.While Home Depot remains a strong operator, there are still reasons for caution. The company continues to face pressure from a softer environment for big-ticket renovations, particularly those requiring financing, as homeowners remain cautious amid economic uncertainty. This weakness in large discretionary projects, coupled with declining operating margins, rising expenses and elevated interest costs, limits near-term earnings potential despite ongoing efforts to expand capabilities in the Pro segment.  It anticipates a decline in earnings per share of about 3% compared with the prior year, or 2% on an adjusted basis.How Consensus Estimates Stack Up for HDOver the past 30 days, the Zacks Consensus Estimate for the current fiscal year has edged down by a cent to $15.03, while the estimate for the next fiscal year has declined by 7 cents to $16.36. Image Source: Zacks Investment ResearchUnlocking Home Depot’s ValuationHome Depot currently trades at a forward 12-month price-to-sales (P/S) multiple of 2.41, which positions it at a premium compared to the industry’s average of 1.71. The stock is also trading above its median P/S level of 2.35, observed over the past year. This premium positioning is especially notable when compared to peers like Lowe’s (with a forward 12-month P/S ratio of 1.67), Floor & Decor (1.69) and FGI Industries (0.06).Image Source: Zacks Investment ResearchHow to Play HD Stock: Buy, Hold or Sell?Given Home Depot’s recent run-up and the mix of supportive growth drivers alongside near-term headwinds, current shareholders may consider maintaining their positions for now. The company’s strategic initiatives, digital transformation and professional customer expansion offer long-term promise, but ongoing margin pressures, earnings softness and macro uncertainty suggest waiting for clearer signs of demand recovery before considering fresh exposure. Home Depot currently carries a Zacks Rank #3 (Hold). 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Today, you have a rare chance to position your portfolio at the forefront of this opportunity.See Top Quantum Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Lowe's Companies, Inc. (LOW): Free Stock Analysis Report The Home Depot, Inc. (HD): Free Stock Analysis Report Floor & Decor Holdings, Inc. (FND): Free Stock Analysis Report FGI Industries Ltd. (FGI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks