Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

Stocks are little changed this morning, with the S&P 500 and the narrower, price-weighted Dow Jones Industrial Average (DJINDICES:^DJI) up 0.09% and 0.18%, respectively, at 10:12 a.m. EST. Both indexes are not much below their record highs.

Dow component Home Depot (NYSE:HD) continues to impress. Reporting results for its fiscal third quarter ended Nov. 3, the company posted earnings per share and revenue that were comfortably ahead of Wall Street's expectations:


Achieved/ Year-on-year increase

Consensus estimate


$19.5 billion


$19.2 billion

Earnings per share, adjusted




 Source: Company press release, Yahoo! Finance

Comparable store sales growth for U.S. locations of 8.2% is particularly impressive -- that's a multiple of the GDP growth rate, which certainly suggests a recovery is taking place in the housing sector. Those numbers augur well for Home Depot's nearest competitor Lowe's (NYSE:LOW), which reports its results tomorrow morning; consequently, Lowe's shares are up 0.71% at a.m. EST.

Home Depot threw the market another bone in raising full-year earnings-per-share guidance to $3.72, above the $3.70 Wall Street consensus estimate. This is the third time in as many earnings announcements that the home improvement retailer has raised full-year guidance. Last year, Home Depot also raised its full-year earnings-per-share guidance for fiscal 2013 during three consecutive earnings announcements.

That kind of business momentum has not gone unnoticed by investors. As of Monday's close, the stock was already up 30.8% year to date, compared to 25.6% for the S&P 500. However, a five-year graph gives a better idea the outperformance gap that has opened up over the past two years:

HD Chart

HD data by YCharts

The business and the share momentum may now be creating expectations that will be difficult to fulfill. At nearly 20 times the next 12 months' earnings-per-share estimate, the stock no longer looks particularly cheap. Let's be clear: It doesn't look wildly overvalued, either; however, investors who wish to climb aboard this train now ought not to expect returns in the next several years to match those Home Depot has produced over the past two.