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No. of Recommendations: 8
care to share how you think of it

here's the story

*Lowe's = per VL, operating margins are 10.8%, HD at 16.5%

*Low knows this - has a new CEO - they are closing 50 stores (30 CAD), shutting down a money losing operation, changing a lot of people and obviously the goal is getting to HD profitability

*HD (and Lowe's) have benefited from a housing run which has seen OM go from 8.6% in 2008 to 16.5% now but rates are putting some pressure on housing so we'll see if something shows up in the next few quarters at these companies

*LOW seems ok on a gross cash flow basis - 5778 vs. 79.2b cap. Debt is 13b but not overly worrisome
but the story is a mess, with lots of charges and such which will provide cover for at least a year

would you consider low under this scenario (solid valuation - opportunity for improvement but not actually a reality) despite muted store growth prospects

HD took a journey from $17 in 2008 to $215 with stores at 2274 to 2284 based on a near doubling of operating margins, helped by strong SSS in an improving housing market and you didn't know margins would move up this hard (I didn't - I stopped following it). But housing is probably less than a tailwind now and HD did a lot of EPS growth from BS leverage too.

I'm just not sure here...
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