HD Click here to go to the original topic          Value Investing Forum Forum Index -> Value Stock Picks dchamber Fri Feb 03, 2006 5:56 pm     HD  HD The current P/E of 15.3 is lower that any average annual P/E since 1989 (that’s all the data I have). Their average PE is 30 and the industry’s is 19. Most analysts predict a 13.5% EPS growth rate but the value line rate is 12%. I’ll use the lower of 12% which should be sustainable given that they averaged over 26% EPS growth for the last 15 years and 20.5% over the last 5. With EPS growth at 12% I estimate a 10 year price target about $300 a share ($285 price plus about $17 in dividends). At its current price of $40 you would get an annualized gain of over 22%. And remember, this is with the lower analyst estimates and much lower than the historical numbers. The average ROE is 17.6%. The current ratio is 1.2. Book value has increased at an annual rate of over 21% for the last 10 years and analyst expect it to increase of 15% in the future. The current ratio is a lot lower than I like but not much lower than the industry. The margin of safety at this price should compensate for the low current ration. I think the price has dipped because of a recent SEC informal inquiry into how HS records credits from vendors for defective merchandise. My concern is this SEC inquiry. If they are cooking their books I can’t trust the numbers, and I prefer to stay away. If not this inquiry may have caused the price to drop to a bargain. I need to break out a few annual reports, and dust of the Graham books. Exciting weekend coming up. Might be bargain here. yhan Sat Feb 04, 2006 2:15 am       HD current P/E is low. however, housing market will be declining starting from this year. This should have strong impacts to HD's business. I just do not see a sign that HD will have better business from this year. I do not think that we will see HD price will be $300/share in 10 years. By the way, insiders are selling more shares than they purchase. blast_investor Sat Feb 04, 2006 1:26 pm       By the way, HD is Warren Buffet stock: http://www.gurufocus.com/holdings.php?GuruName=Warren+Buffett&p=1          Value Investing Forum Forum Index -> Value Stock Picks Page 1 of 1 Search Engine Indexer BlastInvest @2005 p h p B B © 2001, 2002 p h p B B Group