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Home Depot gets boost in Fisher Asset Management

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Fisher Asset Management and Home Depot

According to its latest 13F filings for 4Q14, Fisher Asset Management has added a new position, UBS AG (UBS). It increased its positions in Honeywell International (HON), Baidu (BIDU), Home Depot (HD), and Apple (AAPL). It decreased its positions in Amazon.com (AMZN) and Visa (V).

The hedge fund increased its position in Home Depot (HD) by $110 million.

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Overview of Home Depot

The Home Depot (HD) is the world’s largest home improvement specialty retailer. It was founded in 1978 and is headquartered in Georgia in the United States. It has more than 2,200 retail stores in the United States, including Puerto Rico, the U.S. Virgin Islands, and the territory of Guam. It also has retail stores in Canada and Mexico.

In terms of overall revenue reported to the U.S. Securities and Exchange Commission (or SEC), the company is the largest home improvement retailer in the United States, ahead of rival Lowe’s.

HD to acquire HD Supply

On December 2, 2014, Home Depot (HD) entered into an agreement with HD Supply to purchase most of the assets of HD Supply Hardware Solutions, formerly known as Crown Bolt. It’s a leading supplier of fasteners and builders hardware. It sells its hardware to retailers in the United States. The transaction was expected to close by the end of fiscal year 2014 after obtaining customary regulatory approvals.

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HD declares 3Q14 results

In November 2014, Home Depot (HD) declared its 3Q14 results. Net sales for the third quarter of fiscal 2014 increased 5.4% to $20.5 billion, from $19.5 billion for 3Q13. The underlying reasons for this growth reflect the impact of positive comparable store sales driven by customer transactions and average ticket growth. Gross profit increased 5.7% to $7.2 billion for 3Q14, from $6.8 billion for 3Q13.

As of November 2, 2014, Home Depot had $2.2 billion in cash and cash equivalents. Home Depot believes its current cash position, access to the debt capital markets, and cash flow generated from operations should be sufficient for its operating requirements. It should also be enough for it to complete its capital expenditure programs and fund dividend payments, share repurchases, obligations incurred as a result of the data breach, and any required long-term debt payments through the next several fiscal years.

Analysts expect wider margins for HD

According to the analysts, Home Depot (HD) is expected to post wider margins as the company aims to squeeze more sales per square foot by reorganizing layouts and making room for new product lines. Improvements in merchandising and supply chain operations will result in wider gross margins for HD and will also provide a high return on investments.

On average, analysts expect sales of $82.85 million for the year ending January 15, with profits of $4.49 a share.

In the next article in this series, we’ll look at Fisher Asset Management’s increased position in Apple (AAPL).

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