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Home Depot Rides Out Slow Market

By    |   Wednesday, 10 Aug 2011 05:27 PM

This summer, finally, housing starts began to rise. Home Depot (HD), the world’s largest home improvement retailer, is prospering from its mission to sell great products at good values. Bullish investors have piled into the stock. It has nearly doubled since its early 2009 low.

The retailer isn’t home free. First-quarter fiscal sales slumped 0.2 percent to $16.8 billion from a year ago, missing Wall Street estimates. Comparative U.S. store sales dipped 0.7 percent. First quarter net income rose 12 percent.

Home Depot CEO Frank Blake blamed sluggish sales on a slow spring selling season. He expects sales to pick up, growing 2.5 percent in 2011.

The company has more than 2,200 retail stores in the United States, Canada, Mexico, and China to pump out sales. The retail giant is still trying to nail down China.

Despite sluggish growth, Home Depot sales at long-standing U.S. stores still have beaten rival Lowe’s (LOW) for six straight quarters. Home Depot sweetens the pot by offering investors goodies like a 2.9 percent dividend yield. Relying on its deep pockets, Home Depot also is spending $3.5 billion to repurchase shares during the year.

Higher traffic

Analysts like Home Depot’s prospects. Of the 29 analysts listed on Thomson/First Call, nine have strong buy recommendations and eight have buys, with 11 holds and only one sell.

FBR Capital, which has an outperform rating, praises Home Depot for its focuses on traffic and values. The result is that its same-store sales should outpace rival Lowe’s, its analysts said. The company next reports in mid-August.

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This summer, finally, housing starts began to rise. Home Depot (HD), the world s largest home improvement retailer, is prospering from its mission to sell great products at good values. Bullish investors have piled into the stock. It has nearly doubled since its early 2009...
depot,HD,retail,stocks
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2011-27-10
Wednesday, 10 Aug 2011 05:27 PM
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