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Non-Tech : Home Depot (HD)

HD 358.10

-1.2%

3:59 PM EST

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To: Xpiderman who wrote (99)	2/25/1998 12:39:00 PM
From: Xpiderman	of 1169

MerrillLych issued a new research report regarding HD stock yesterday (Feb. 24, 1998). Intermediate and Long Ter BUY with Price target of $85 in 12 Months. Investment Highlight: - "Inventory yield" has declined for four straight quarters due to new initiatives. - As those initiatives begin to kick in, HD's ROC devoted to inventory should rise. - Management indicates this is a primary 1998 focus which support our "Street - high" estimate. Estimates (Jan) 1997 A 1998 A 1999 E EPS: $1.29 $1.64 $2.10 P/E 51.1x 40.2x 31.4x EPS (Yr/Yr) N/A 27.10% 28.00% Consensus EPS N/A $1.63 $2.03 Q1 EPS (Apr) $0.35 $0.43 Cash Flow/Share $1.57 $2.00 $2.60 Price/Cash Flow 42.0x 33.0x 25.4x Dividend Rate: $0.16 $0.20 $0.25 Dividend Yield 0.20% 0.30% 0.40% Strong EPS Despite Declining "Inventory Yield" HD reported a 21% increase in EPS on a 13-week versus 14-week baise. Adjusting for the lost week, we estimate the EPS gain would have been 27%. The reported EPS number "hit" consensus and in a stock market getting spoiled with respect to retail earning beating plan(WAL Mart and LOWE's)during past two days, we expect some negative trading volatility in the stock short-term. However, we remain committed to our bullish view long-term

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