Gabelli & Co. has a research note on Home Depot Inc. (NYSE: HD) this morning which many DJIA stock investors will want to pay attention to after seeing that Home Depot shares are up more than 50% from last year’s lows. The company is rated as BUY but the private market value target is only $42.00 at Gabelli and the stock is currently trading north of $43.00.
What is important is that Gabelli’s note after visiting the company signals that Home Depot itself “does not expect the housing market to recover in 2012 and expects moderate and consistent improvement over the long-term.” The good news is a higher margin expectation from market share gains and cost reductions and it plans to take sales per square foot from the current $290 to $350 by 2013.
Valuations may be a bit high as well with earnings estimates of $2.40 EPS this year, then $2.80 EPS and $3.25 EPS. That is not exactly cheap. Unfortunately, the consensus price target is $42.70 as well.
JON C. OGG
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