1. EM-Trade | Agenda Interviews Poker Tournament Fantasy Stock Market
Home Depot Analysis – Presentation
Mark Your Calendar
April 15th: Applications Due (LL “IWantToHelp”); Sign-up deadline for Fantasy Stock Market Game
April 26th: Poker Tournament (Winship Ballroom)
Early September: Next Meeting

2. Home Depot | Description
The Home Depot owns and operates 1,471 do-it-yourself warehouse retail stores offering building materials, home improvement products and related furnishings.
For the FY ended 1/30/05, revenues rose 13% to $73.09B. Net income rose 16% to $5B.
Revenues reflect increased sales due to the opening of new stores.
Net income also reflect improved gross profit margins due to lower cost of merchandise sold as a percentage of revenue.

3. Home Depot | Current Ratio
Definition: Current Assets / Current Liabilities
Current is short-term
Current Assets: Money, Inventory
Current Liabilities: Short-term debts
Debts are IOUs
General idea: A company is generally considered financially healthy when current assets are equal or higher than current liabilities.  
What to look for: Current Assets > Current Liabilities
Home Depot’s Balance Sheet [Diagram]
Recommendation: A current ratio of 2. Good (1.395)

4. Home Depot | Debt/Equity Ratio
Definition: Long-Term Debt / Equity
Long-Term Debt
Equity: Total assets – Total Liabilities     
General idea: A higher debt/equity ratio generally means that a company has been aggressive in financing its growth with debt.
What to look for: A low Debt/Equity Ratio. The lower the ratio, the better.
Home Depot’s Balance Sheet [Diagram]      
Home Depot: Long term debt / Equity = Ratio Year , / 22,407 = 0.038
Recommendation: Ratio of 0.1. Great (0.038)

5. Home Depot | P/E Ratio Definition: Price / Earning
The price of the stock / the year earnings of a company.
Earnings: Earning in EPS (Earnings per share)
General Idea: The higher the P/E ratio, the higher the speculation of the company’s future earning performance
What to look for: Depends. Optimistic: High P/E ratio. Conservative: Low P/E ratio
Home’s Depot Income Statement - Look at EPS
Home Depot’s Quote
Ratio: 17.09
Recommendation: P/E ratio of 15. Great (17.09)

6. Home Depot | Growth Rates
Definition: The compounded annualized rate of growth of a profit, earnings, revenues, etc.
Relative measurement (percentage):
(This year’s profit – Last year’s profit) / (Last year’s profit)
General Idea: Higher the growth rate, higher the risk.
Want to look for growth.
What to look for: Depends. Risk taker vs. Risk averse
Home’s Depot Income Statement
Revenue Growth: (64, ,247.0) / (58, ) = 11%
Recommendation: 10 to 15% growth rates. Great (11%)

7. Home Depot | Earnings
Earnings: The net income of a company during a specific period. Generally, but not necessarily, referring to after-tax income.
Earnings are perhaps the single most studied number in a company's financial statements. They show how profitable a company is.
Guidance has a role in the market because it provides information that can be used by investors to analyze the company, evaluate management, and create forecasts.
Companies are foolish if they think that they can alter the market's short-term focus.
The Street will still do what it wants, and it will stay focused on quarterly timelines.
If, however, more companies opt for no guidance, the Street may inadvertently become more rational and stop whipsawing stock prices for miniscule variances.
Earnings Estimate: An analyst's estimate for a company's future quarterly or annual earnings.
Analysts use forecasting models, management guidance, and fundamental information on the company in order to derive an estimate.
Earnings Surprise: When the earnings reported in a company's quarterly or annual report are above or below analysts' earnings estimates.
When a positive earnings surprise occurs, share price will usually increase. A negative earnings surprise will usually result in a decline in share price.
Earnings Growth Rate: indicators that reflect the opinions of industry analysts as to the growth potential of a company's earnings.
The data is supplied by an outside service.

8. Home Depot | Insider Trading
Insider Trading: The buying or selling of a security by someone who has access to material, nonpublic information about the security.
Insider trading can be illegal or legal depending on when the insider makes the trade:
Illegal when the material information is still nonpublic. Trading while having special knowledge is unfair to other investors who don't have access to such knowledge. 
Includes: tipping others when you have any sort of nonpublic information. Directors are not the only ones who have the potential to be convicted of insider trading. People such as brokers and even family members can be guilty.
Legal once the material information has been made public, at which time the insider has no direct advantage over other investors.
The SEC, however, still requires all insiders to report all their transactions. 
Insider Trading (Prev. 6 months)
Net Insider Trades
-6.00
# Buy Transactions
1.00
# Sell Transactions
7.00
Net Shares Purchased (Mil)
-0.251
# Shares Purchased (Mil)
0.005
# Shares Sold (Mil)
0.256
Institutional Ownership
% Shares Owned
63.682
# of Institutions
2,436.00
Total Shares Held (Mil) 1,
3 Mo. Net Purchases (Mil)
3 Mo. Shares Purchased (Mil)
3 Mo. Shares Sold (Mil)
45.913
An executive, director or major shareholder sold a small number of shares recently. (Neutral)
Shares are neither being accumulated heavily nor sold heavily by financial institutions. (Neutral for a large company)

9. Competitive Factors Price Store location Customer service
Depth of merchandise

10. Home Depot vs. Lowe’s 55% of Lowe’s are within 5 miles of HD
HD commonly faces decline up to 15% when Lowe’s enters nearby
Industry saturated in 4 years?

11. Home Depot | Chart Analysis
Price
Volume
Moving Averages
MACD
RSI
Stochastic

12. Price

13. Volume
The number of trades in a security over a period of time.

14. Volume

15. Volume

16. Volume

17. Moving Averages (MA)
An average of data for a certain number of time periods.

18. MACD (Moving Average Convergence/Divergence)
Displays trend following characteristics
Compares moving averages

19. RSI (Relative Strength Index)
- Compares overbought (>70) and oversold (<30)

20. Stochastic Oscillator
- A momentum indicator that measures the price relative to the high/low range over a set period of time.

21. Thank You!