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Non-Tech : Home Depot (HD)

HD 371.11

-0.8%

Nov 12 3:59 PM EST

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To: mauser96 who wrote (485)	1/14/1999 11:43:00 AM
From: Beltropolis Boy	Read Replies (1) of 1169

excerpts from lehman bro's latest write-up (a week old for non- clients). for the record, mr. julian also rates LOW a 2-outperform. ----- Home Depot: Raising Estimates, Price Target Author: William A. Julian 1(212)526-2482 Rating: 2 Rank (Old): 2-Outperform Rank (New): 2-Outperform Price : $59 3/8 52wk Range: $62-28 Price Target (Old): $58 Price Target (New): $70 Today's Date : 01/07/99 Price (As of 1/6): $59 3/8 Proj. 5yr EPS Grth: 20.0 % Shares Outstanding: 1540.0 Mil. Mkt Capitalization: 91.45 Bil. P/E 1998; 1999 : 56.6 X; 46.4 X Current Book Value: $3.87/sh Convertible: YES Debt-to-Capital: 17.3% Disclosure(s): None * We are raising our fourth-quarter estimates: comps from 6% to 7% (based on strong results through December) and EPS from $0.26 to $0.27 (based on strong sales). * We are raising our price target from $60 to $70, based on continued flat relative P/E and stock price movement with EPS growth of 20%. * The catalyst for these moves is the strong December comp reported by Lowe's today (up 10.6%). Historically, Home Depot's comps have consistently exceeded Lowe's comps (see our table below). Below we set forth the historical comp results of Home Depot and Lowe's. Note that Home Depot usually exceeds Lowe's comp results by 100-200 basis points. We expect that to remain the case, and consequently, we are comfortable raising our estimates. QUARTERLY COMPARABLE-STORE SALES GROWTH LOW HD Diff. 1995 Q1 2.0% 5.0% 3.0% Q2 4.0% 4.0% 0.0% Q3 -3.6% 1.2% 4.8% Q4 -3.3% 1.0% 4.3% 1996 Q1 1.0% 3.0% 2.0% Q2 8.0% 9.0% 1.0% Q3 10.0% 7.0% -3.0% <-- LOW faced easy -3.6% comparison Q4 6.0% 7.0% 1.0% 1997 Q1 7.0% 11.0% 4.0% Q2 3.0% 5.0% 2.0% Q3 2.5% 7.0% 4.5% Q4 2.5% 6.0% 3.5% 1998 Q1 5.0% 7.0% 2.0% Q2A 6.0% 7.0% 1.0% Q3A 4.4% 7.0% 2.6% Average 2.2%

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