Missing Home Depot

Ugh, how did I not see Home Depot (HD)? The stock is at a new 52-week high today.
Actually, I did see it but still didn’t pull the trigger. These are the trades that really annoy me. Here’s what I wrote last June after HD raised guidance:

Last year, HD earned $1.78 a share. In May, the company said that it expects to see EPS fall by 26% and sales to fall by 9%. That translates to full-year earnings of $1.32. Today they said to expect EPS to fall by 20% to 26%. A 20% drop works out to $1.42 which is slightly above Wall Street’s consensus of $1.40.
Make no mistake, this isn’t great news but it’s not awful and all the news until now has been awful. HD’s earnings peaked in 2007 at $2.83 a share so we’re going to see earnings fall in half—so has the stock price.
At its current price, I wouldn’t say Home Depot is a good buy, but it’s not unreasonable to see year-over-year earnings increases within a few quarters. If there’s more good news from HD, it could be a good buy before the end of the year.

The good news did come. HD beat earnings in August, November and a very nice beat a few weeks ago (24 cents per share vs. 17 cents per share), but moron me didn’t step it up.
The shares dipped below $25 in early November and it’s been off to the races ever since. Since November 4, HD is up 28% compared with 9% for the S&P 500. I let that one get away.

Posted by on March 8th, 2010 at 12:15 pm


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