Home Depot Beats Street Estimates

I have been watching Home Depot (HD) for a while now thinking about adding this issue long in my retirement account believe it or not.  Before you say I am crazy, remember that most of those foreclosed homes that now make more than 50% of all sales in the bubble states need a good amount of repair before the new owner moves in or rents the home.

You should see what owners do before they leave. A few things I have seen is a) concrete flushed down the toilets b) dead racoons sheetrocked behind the walls c) all appliances, countertops and lighting fixtures removed d) all electrical and plumbing systems removed e) all windows removed.

This stuff can be high ticket and even though home sales are far lower in number than during the bubble years, the number of properties sold that need repair may be much greater.

The only thing I have yet to get my arms around is their credit exposure. They do a lot of financing and many who used credit to finance home improvement projects over the past few years will not feel like paying that debt given their home price is down 50%. If they lose their home to foreclosure, the same goes. While HD will have a ton of new business due to the foreclosure crisis, they may still have dues to pay due to past business.

Home Depot Profit Falls But Beats Wall St View

* Q3 EPS of 45 cents vs. 39-cent estimate

* Stands by full-year profit forecast

* Steeper drop in full-year sales expected

* Stock rises 3 percent premarket (Adds analyst comment, byline)

Source: Reuters 10-18

Posted in Categories: Contributor, External Research, Retail, Stocks, USA.

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