Home Depot = Home Repo = earnings disaster stock tanks ? can anyone explain these ?
Home Depot = Home Repo = earnings disaster stock tanks ? can anyone explain these ?
Stock down 50 percent !! high 0f 70 now at around 32 .. whoa u talk about a
crash and burn ..... even tony stewart cant bail out this monster read on...
ATLANTA, Nov 10 - When Home Depot Inc. unveils third-quarter
results on Tuesday, Wall Street will be looking for the world's largest
home-improvement retailer to show a blueprint for coping with the market
changes that prompted a rare profit warning.
The Atlanta-based giant shocked investors and stock analysts last month by
saying it would miss earnings expectations for its fiscal third and fourth
quarters, the company's first profit warning in more than five years.
Home Depot blamed lower prices for building materials, such as drywall and
lumber. Yet some analysts said falling lumber prices is just one issue facing
Home Depot.
The company must move decisively to convince investors there are no other major
problems that could keep it from meeting its earnings growth targets, they
said.
"I would like to hear them come out with a plan to ensure this (profit warning)
won't happen again," said Aram Rubinson, analyst at UBS Warburg. "So far, they
have not done anything."
Dan Wewer Jr., analyst with Deutsche Bank Alex. Brown, said Home Depot needs to
make it clear that the main problem accounting for the profit warning was price
deflation and not a significant falloff in consumer traffic through its stores.
The retailer needs to show it can manage inventories and expenses to offset the
weakening in consumer spending that followed interest-rate increases by the
U.S. Federal Reserve, he said.
In light of the profit warning, analysts also said the company needs to
scrutinize spending closely. Home Depot has "been too aggressive in its expense
budgets," Wewer said.
Wall Street wants to see some returns from money the company has spent to
launch or test new-store formats, as well as an initiative to provide
individualized attention to professional contractors, he said.
Home Depot, bucking a trend among rivals, has also begun selling heavy-duty
appliances, such as refrigerators. "They need to show some payback from these
investments," Wewer said.
On Tuesday Home Depot is expected to report net income of 28 cents a diluted
share for the third quarter ended Oct. 31, in line with a lowered analyst
consensus estimate but down from the previous estimate of 31 cents, according
to First Call/Thomson Financial, which tracks such data.
The company's stock plunged about 29 percent at the time of the profit warning
to $34-7/8. Currently, it trades at around $36-9/16, down $2-5/16, on the New
York Stock Exchange.
For the most part, analysts expect the stock to trade in a narrow range in the
next month or two, as investors continue to monitor consumer spending trends.
Because of economic slowing and the company's earlier profit warning, "people
are going to take the company's goal of 22 percent earnings growth for next
year very lightly," Maureen Carini, an analyst at S&P Equity Group in New York,
said.
A key to Home Depot's continued growth could be overseas expansion. Carini
expects the company to focus expansion efforts on markets where it already has
a presence, such as Canada, Chile and Argentina.