Home Depot Derails: Fool by Numbers

• Email
• Share
• Print

On May 15, Home Depot (NYSE: HD) released first-quarter earnings for the period ended April 29.

• Sales rose by a mere 0.6% as 46% sales growth in the supply segment was offset by a 4.3% decline in the retail segment. Comparable-store sales fell 7.6%.
• Net profit decreased 29.5% to $1.05 billion because of rising selling, general, and administrative expenses.
• For fiscal 2007, the company believes its earnings per share will be at the low end of its earlier guidance of the 4%-9% decline that management expects.

(Figures in millions, except per-share data.)

Income Statement Highlights

	Q1 2007	Q1 2006	Change
Sales	$21,585	$21,461	0.6%
Net Profit	$1,046	$1,484	(29.5%)
EPS	$0.53	$0.70	(24.3%)
Diluted Shares	1,969	2,122	(7.2%)

Get back to basics with the income statement.

Margin Checkup

	Q1 2007	Q1 2006	Change*
Gross Margin	32.9%	33.7%	(0.8)
Operating Margin	8.5%	11.3%	(2.8)
Net Margin	4.9%	6.9%	(2.1)

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets	Q1 2007	Q1 2006	Change
Cash + ST Invest.	$2,081	$2,586	(19.5%)
Accounts Rec.	$3,529	$3,412	3.4%
Inventory	$14,413	$13,401	7.6%

Liabilities	Q1 2007	Q1 2006	Change
Accounts Payable	$9,706	$9,452	2.7%
Long-Term Debt	$11,640	$6,652	75.0%

The balance sheet reflects the company's health.

Cash Flow Highlights
No cash flow statement? That's like trying to pound in a nail without a hammer!

Free cash flow is a Fool's best friend.

Related Foolishness:

• Home Depot Gets Ready to Clock In
• Repair Work for Home Depot
• Remodeling to the Rescue

Home Depot is a Motley Fool Inside Value pick. For more great recommendations on undervalued stocks, come and join the market-beating newsletter free for 30 days.

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean. This data has been provided by Netscribes. To provide feedback on this article, please click on the "feedback" button below.