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Home Depot (HD) Beats, Gurus Are Mixed on Autozone (AZO)
Posted by: earningsyield (IP Logged)
Date: February 26, 2013 10:34AM

U.S. indexes look to bounce back as all major indexes suffered their worst day of 2013 and the worst day since Nov. 7. The media is blaming political instability in Italy but as I noted yesterday, markets are overvalued when compared to historical valuations. Markets could see continued volatility as Fed Chairman Ben Bernanke testifies in front of Congress. Investors are looking for clues as to when the Fed will step back on his monetary easing program.


A day after rival Lowe’s (LOW) posted okay numbers, Home Depot (HD) reported earnings of $0.67 per share on revenue of $18.24 billion. Analysts were expecting $0.64.share on revenue of $17.70 billion. At the same time, the home improvement retailer announced a new $17 billion share buyback program and increased its quarterly dividend by 34% to $0.39. While the increased dividend should be cheered, I have to question Home Depot’s logic of authorizing a new buyback program at a time when the stock is making new highs. Home Depot’s outperformance was helped by a continued housing recovery and repairs following Hurricane Sandy. The company also gave numbers for fiscal year 2013 in which it expects EPS of $3.37 and free cash flow of $5.7 billion. It also expects revenue growth of 2%.

Gurus have for the most part have been net sellers of the home improvement retailer with most Gurus selling out or reducing their positions in the third quarter of 2012. Two gurus who have been bullish lately is Bridgewater Associates Ray Dalio who added to his position in the last quarter but the impact to his portfolio is insignificant. The other Guru who is bullish is George Soros which established a new position in the third quarter. The new purchase had an impact of 0.92%

Another company reporting earnings is Macy’s (M), which reported EPS of $2.05 on revenue of $9.35 billion. Analysts were expecting EPS of $1.99 on revenue of $9.03 billion. The department store chain also forecasted numbers that were above analyst expectations. Macy’s is now expecting same store sales to rise 3.5% during the year and expects to earn $3.90-3.95 per share.

Several Gurus have been bullish on shares of Macy’s. These Gurus include:
Maverick Capital’s Lee Ainslie’s position is significant considering Macy’s is now the top holding and represents 4.4% of the Maverick Capital portfolio.

Staying on the retail front, auto parts retailer AutoZone (AZO) posted earnings of $4.78 per share versus analyst estimates of $4.76 per share. Shares are mixed as revenue fell short of analyst expectations but CEO Bill Rhodes expects an immediate recovery as tax returns come in and consumers begin to make repairs on their cars.

"Our belief is the approximate two week delay in processing of income tax returns this year was the key contributor to this decline in sales," the company said in a statement.

It has been a mixed bag for Gurus as several Gurus are reducing or selling their positions. At the same time, several Gurus have added to or established a new position.

Those Gurus who are bullish include:
Those Gurus who are bearish include:

Guru Discussed: Ray Dalio: Current Portfolio, Stock Picks
Lee Ainslie: Current Portfolio, Stock Picks
Stocks Discussed: LOW, HD, M, AZO,
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