Home Depot Needs Improvement: Fool by Numbers

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On Tuesday, Feb. 20, home-improvement giant Home Depot (NYSE: HD) released fourth-quarter and year-end results for the period ended Jan. 28. Here are the quick-and-dirty details for the quarter.

• Total sales grew 4%, but total retail store sales fell 2%, and related same-store sales fell 6.6%. HD Supply sales accounted for the growth, improving 64.4% to $2.9 billion, or about 14% of total sales.
  
  
• Diluted earnings fell 23.3%, including a $0.04 charge related to CEO severance packages. Excluding the charge, earnings met analyst expectations.
  
  
• Management did not provide 2007 guidance, but it plans to update investors with its "business strategy and financial outlook for fiscal 2007" at its annual analyst conference on Feb. 28.
  
  
• Home Depot is a two-star stock in CAPS, our interactive stock database.

(Figures in millions, except per-share data)

Income Statement Highlights

	Q4 2006	Q4 2005	Change
Sales	$20,265	$19,489	4.0%
Net Profit	$925	$1,285	(28.0%)
EPS	$0.46	$0.60	(23.3%)
Diluted Shares	2,004	2,128	(5.8%)

*Three months ended Jan. 28, 2007 and Jan. 29, 2006.

Get back to basics with a look at the income statement.

Margin Checkup

	Q4 2006	Q4 2005	Change*
Gross Margin	32.76%	33.83%	(1.07)
Operating Margin	7.91%	10.51%	(2.60)
Net Margin	4.56%	6.59%	(2.03)

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets	Q4 2006	Q4 2005	Change
Cash + ST Invest.	$614	$807	(23.9%)
Accounts Rec.	$3,223	$2,396	34.5%
Inventory	$12,822	$11,401	12.5%

Liabilities	Q4 2006	Q4 2005	Change
Accounts Payable	$7,356	$6,032	21.9%
Long-Term Debt	$11,643	$2,672	335.7%

Learn the ways of the balance sheet.

Cash Flow Highlights

	FY 2006	FY 2005	Change
Capital Expenditures	$3,542	$3,881	(8.7%)

Home Depot must be off making repairs -- they didn't include a cash flow statement. Fools will have to wait until the company files its 10-K with the SEC for operating cash flow details.

Find out why Fools always follow the money.

Comparable companies:

• Lowe's (NYSE: LOW)
• Tractor Supply (Nasdaq: TSCO)
• Builders FirstSource (Nasdaq: BLDR)
• Building Materials Holding (NYSE: BLG)

Related Foolishness:

• Home Depot Severs Supply Lines
• Repair Work for Home Depot
• Best and Worst in Customer Service

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.

Home Depot is a recommendation of Motley Fool Inside Value. Discover why the home retailer has built up a market-beating performance record with a free 30-day trial.

Fool contributor Ryan Fuhrmann is long shares of Home Depot and Tractor Supply but has no financial interest in any other company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.