Home Depot (HD) rose 4.7% in afternoon trading, the best in the Dow, even as home prices continued to show weakness. The overall index was up 0.6%.
The Case-Shiller home price index out today indicated that home prices were down 3.9% year over year in the third quarter, slightly better than the 5.8% year over year drop in the second quarter.
The company may be getting a boost from a breakfast it held with sell-side analysts this m0rnng. Janney Capital Markets analyst Darren Bassman writes that the company appears to have a good plan in place to grow even without a strong housing market.
“Given minimal expected improvement in the housing market, HD is shifting its model to cater to DIY customers by changing mix in the store and focusing on smaller projects. Clearly, the company’s goal to achieve 10% operating margin is based on this scenario, with potential upside given any macro tailwind. Together with its ability to repurchase about 8% of shares with over $4.2 billion in FCF, EPS should grow over 15% in 2012.”
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