I'm going to add some HD to my position when the market opens today.
This corporate governance number is apparently not so easy to understand. I see for Home Depot:
"CORPORATE GOVERNANCE
Home Depot Inc.'s Corporate Governance Quotient (CGQ®) as of 1-Jun-06 is better than 99.6% of S&P 500 companies and 100% of Retailing companies."
There surely was a public relations disaster at the shareholders' meeting when the Board failed to show, and Mr. Nardelli crudely brushed aside shareholders who wanted to discuss his pay package. And while the corporate governance report is dated 1-Jun-06, by June 23, the business media were announcing that HD's options were being probed by the SEC.
Maybe HD does have great corporate governance. To me though, perception means more than some sophisticated ranking system. And my perception of HD is that the BOD have not been overseeing management properly, and the checks/balances on Mr. Nardelli need to be improved.
Perhaps Mr. Nardelli's behavior is one reason people may have given up on HD --- the stock is approaching a two-year low. Meanwhile though, the stores exist, they grow in number, people buy stuff there, and the financial metrics (p/e, dividend growth, roe)look good to me compared to the stock price you have to pay to get that performance .
Of course, I recognize housing supply and housing sales are issues, and although HD is trying to focus resources on commercial market (too), it's not clear as to whether or how much HD will suffer from homeowners reducing their spending at HD. Perhaps this is the chief culprit why HD stock is down. |
