Download - Home Depot Company Analysis
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Analyst TeamChristina CaamanoEric SchaferSusan Tatara
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Home Depot Described
Past Performance
Future Performance
Investment Recommendation
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World’s largest home improvement retailer 2,200 stores located in the U.S, Mexico,
China, Puerto Rico, Canada, Guam and the Virgin Islands
Sells building materials, home improvement, lawn/garden products and a variety of services.
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Do-it-yourself Do-it-for-me Professional customers
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Net earnings was $2.3 Billion Diluted earnings per share:$1.34 Net sales: $71.3 Billion Operating income: $4.4 Billion Gross Profit: 24.0 Billion
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Merchandise Inventories asset: Remained at similar level for 2 years Largest asset (inventory driven company)
We expect this number will decrease by a small amount in fiscal year 2009….
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Buildings asset:Increased by 4%
Home Depot purchased more buildings in fiscal year 2008
Home Depot could place properties on market as a “sale lease back”.
This would result in added value and increased revenue.
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Furniture fixtures and equipment asset Construction in progress asset Short term debt liability Current installments of long term debt liability Total liabilities
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LIQUIDITY:2008 2007 Industry Lowe’s
Current Ratio 1.20 1.15 1.20 1.15
Quick Ratio 0.13 0.14 0.10 0.08
Cash debt 0.46 0.45 NA 0.52
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ACTIVITY:2008 2007 Industry Lowe’s
AR T/O 63.91 34.52 63.90 0.00
Inventory T/O 4.22 4.18 4.20 4.01
Asset T/O 1.13 1.10 4.96 1.50
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PROFITABILITY:2008 2007 Industry Lowe’s
Profit Margin 0.03 0.06 NA 0.05
RR on assets 0.04 0.06 6.37 0.07
EPS 1.34 2.38 NA 1.51
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COVERAGE:2008 2007 Industry Lowe’s
Debt to Asset 0.57 0.60 0.58 0.45
Time Interest 6.99 10.41 NA 13.52
Cash debt 0.22 0.14 NA 0.28
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Liquidity: Cash flow from operations Net cash in financing activities
Current cash debt coverage ratio decreased a bit in 2008 fiscal year from
0.46 to 0.45
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Net cash Leases Commercial paper programs Stock repurchase program
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Write offs Rationalization charges Current economic conditions and relationship
to decline in sales…
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Compensation discussion and analysis
Off balance sheet arrangements
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FIFO Method In Canada a weighted average inventory
system was utilized in 2008
In Fiscal Year 2008, inventory was reduced while maintaining a favorable in-stock rate
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Change in top level management
Non GAAP results Discontinued operations Revenue recognition
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HOLD – if you currently own this stock
BUY - good investment opportunity
Home Depot is financially sound and will survive the economic downturn…
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Questions