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February 19, 2006
Earnings Preview: Home Depot
From the AP:
Home Depot Inc. reports earnings for the fourth quarter on Tuesday, Feb. 21 before the market opens. The following is a summary of key developments and analyst opinion related to the period.
EXPECTATIONS: The world's biggest home improvement retailer in January forecast fiscal 2005 earnings between $2.64 and $2.67 per share, on sales of at least $81 billion.
Wall Street expects Home Depot to post earnings of 56 cents per share, the mean estimate of 22 analysts surveyed by Thomson Financial, on $18.74 billion in sales.
ANALYST TAKE: "We remain very positive on the home improvement sector and Home Depot's prospects, particularly given current valuation levels," Lehman Brothers analyst Alan Rifkin wrote in a client note. "Home Depot shares are currently trading in line with the five-year historic low forward price-to-earnings ratio, based on consensus estimates."
QUARTER DEVELOPMENTS: Home Depot in January said it would acquire Hughes Supply, one of the nation's biggest sellers of construction, repair and maintenance products, for $3.19 billion, its biggest ever acquisition.
Also in January, Home Depot said it would scale back new store openings over the next five years, as it shifts from the retail business in favor of the wholesale commercial and industrial markets. The company, which currently operates 2,043 stores in the United States, Canada and Mexico, said it will open 400 to 500 stores through 2010, down from the 941 it opened since late 2000.
Earlier this month, the Financial Times reported Home Depot was in talks to buy up to 49 percent of Orient Home, a Chinese retail chain, for more than $200 million. The company declined to comment on the report.
COMPETITORS: Home Depot competes with Lowe's Cos., the nation's No. 2 home improvement chain, which on Feb. 1 said it would bolster its current share buyback program by up to $1 billion. The company is scheduled to report its quarterly results later this month.
STOCK PERFORMANCE: Home Depot shares are up 3 percent so far this year and trading near a 52-week high of $43.98 it hit in July 2005.
Posted by edelfenbein at February 19, 2006 4:10 PM
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