Announcement

**BettorsChat** · 03-08-2005, 06:17 AM

Home Depot Stocks Up On Its Own Shares
John Dobosz, 03.03.05, 11:40 AM ET

NEW YORK - David Fried editor of the Buyback Letter, is adding shares of Home Depot to his letter's model portfolio.

The Atlanta-based retailer of home improvement, building supply, and lawn and garden products recently reported that sales grew 13% to $73.09 billion for the year ended Jan. 30, 2005. Net income increased 16% to $5 billion. Sales growth was helped by the addition of new stores, while profits were aided by improved gross margins.

Home Depot (nyse: HD - news - people ) shares are up 8.2% in the past 12 months--slightly ahead of the 5.5% gain in the shares of its archrival, Lowe's (nyse: LOW - news - people ), and more than double the 3.9% advance of the exchange-traded Retail HOLDRs Trust (amex: RTH).

Home Depot closed yesterday at $39.98, 9.7% lower than the company's 52-week high of $44.30 on Nov. 16, 2004. Home Depot trades for 15.7 times expected (January 2006) earnings of $2.55 per share, 1.2 times sales and 3.6 times book value. The company's market capitalization is $87.8 billion, and it sports a debt-to-equity ratio of 0.089.

What attracts Fried to Home Depot is the combination of its value characteristics and its active share repurchase program that has produced a net reduction in shares outstanding. A smaller share count favorably affects several fundamental metrics, most notably earnings per share, which results in a lower price-to-earnings ratio.

Analysts look for earnings per share at Home Depot to grow 13% this year, and at about the same pace annually for the next five years. This gives the company a price-to-earnings growth rate of 1.06. From operations, Home Depot produced $6.78 billion of cash flow in the past 12 months and free cash flow of $3 billion.

Last week, Home Depot announced an additional $2 billion stock buyback, which represents approximately 2.25% of the company's market capitalization. Home Depot has already bought back $7 billion worth of its own stock over the past two and a half years, while also doubling its cash dividend to shareholders. Home Depot raised its quarterly dividend by $0.10 per share Feb. 24, to be paid March 24 to shareholders of record on March 10. Home Deport currently yields 1.0%.

Fried is typically a long-term holder of shares in his Buyback Letter portfolios and looks for significant capital appreciation in Home Depot shares in the next 12 to 24 months.

**BettorsChat** · 03-08-2005, 06:18 AM

Last week, Home Depot reported its earnings for its fiscal fourth quarter, ended Jan. 30. At $0.47 per diluted share, earnings increased almost 12% from the year-earlier period. However, earnings met but did not exceed analysts' estimates of $0.47. Now, since Home Depot had beaten the Street's estimates in the previous seven quarters, this report was very bad. Wall Street benchmarked the company's earnings against its seven-quarter winning streak, and investors responded by sending share prices down by 4%.

Covering analysts' reaction to Home Depot's earnings announcement, The Wall Street Journal quoted an analyst at Sanford Bernstein as saying, "People expected it to be a little better than expected. That's how it works."

Even if companies beat estimates in the trailing quarter, they are expected to continue to meet, if not beat, analysts' estimates in future quarters, and they're closely watched for changes in management's projections or the dreaded "guidance below expectations."

**wallstreet** · 03-08-2005, 11:23 AM

ghost,

I need more information here-

Where are the shares? What else do you have?

HD is a good strong company, but tell me about what else you have, what kind of an account you have it in and your goals/risk tolerance etc.

Thanks

**ghost44** · 03-08-2005, 02:05 PM

well last year i quit HD, and was forced to move the computer share? from smith and barney to now merrill lynch. thats is all i have. i just kept on purchasing it over the years.

its in a basic ML direct acct. truthfully, its money that i havnt seen the past 5 years. as far as risk? im open to anything.

thanks so much for the valuable info bettorschat and wallstreet. ill be looking forward to the next post

gene

**BettorsChat** · 03-08-2005, 04:35 PM

Personally I would hold it for long term. They didn't beat the estimate for the first time in 7 qtrs so they are coming down. What do people expect of them?

Also what is your average price per share that you have in them? And are you letting the dividend re-invest into more shares?

**wallstreet** · 03-09-2005, 03:10 PM

First thing I would do is get those shares out of Merrill Lynch..no need to pay 200 bucks to trade stock.

Get them transfered to a brokerage like Ameritrade, Scottrade or Quick and Riley. Then decide what you want to do with them..sell or hold and what would be next.

No reason you leave them at that establishment.

**chaching22** · 03-23-2005, 10:08 PM

Emerging Market International

THis fund has totally tanked the last 2 weeks and I'm not sure why? Leave money in it or pull out, it's down almost 10% in 6 days. Help

**BettorsChat** · 03-24-2005, 12:35 AM

Originally posted by chaching22

THis fund has totally tanked the last 2 weeks and I'm not sure why? Leave money in it or pull out, it's down almost 10% in 6 days. Help

What's the symbol?

**chaching22** · 03-24-2005, 08:50 AM

Bc

It is a category within my 401K options within my company has been up in the mid twenties the last 2 years. I can get the symbol but wondered if there was any fundamentals behind why. It's called the EMerging Market Interntaional Fund. Has always had a good amount of swings but this is ridiculous. Th for any imput. I'm off to Sawgrass for the rest of the day.

**BUD GREGG** · 03-24-2005, 08:55 AM

Previously I Metioned The Purchase Of Winn Dixie Stock, At That Time It Was Approx 61 Cents A Share, It Went To 1.47 Then Profit Taking Happened, It Now Is At 95 Cents, As Of Yesterday Winn Dixie Is In Receipt Of A 800 Million Loan As A Result Of Bankruptcy Reorg, Things Continue To Imrove For This Chain

**wallstreet** · 03-24-2005, 11:05 AM

Bud,

Set a loss limit and live with it. If you think it goes to 3 and you feel willing to hold back to 60 cents or lower, then that is your decision. If you are worried and want to book a profit, then take some off the table.

Remeber about pigs and bulls and bears. Dont be a pig.

chaching, there are likely 10-15 Emerging Market funds..we need a company who issued it or better a trading symbol. I would research it if you can online and see the holdings..or bring the symbol here and we can help you.

**chaching22** · 03-24-2005, 11:25 AM

Wall Street

The fund is T Rowe Price, no symbol that I know of only says PRMFX. I'm just wondering if there is a prevailing reason why international is tanking the last 2 weeks? Any advice would be appreciated. Thx.

**BUD GREGG** · 03-24-2005, 01:14 PM

Thanks Wallstreet, Its Never A Case Of Pigs Bulls And Bears, I Am The Peanut Vendor, Don't Want To Set The World On Fire, Just Want To Keep My Nuts Warm....................

**wallstreet** · 03-24-2005, 05:16 PM

chaching-

Check this link..

http://finance.*****.com/q?s=PRMSX&d=t

Check out the holdings tab, risk, performance etc..

You might want to change into another group. I dont care for T Rowe Price, most of their funds have loads and have high expense ratios..I would rather be in an index vs a mutual fund..

Hope it helps!

edit) I dont know why BC does not allow y ahoo to be a word here..but after finance it is supposed to be ya hoo..

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