978-0073526898 PowerPoint Session 8 – HD Part 3

subject Type Homework Help
subject Pages 8
subject Words 214
subject Authors Richard Sloan, Russell Lundholm

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19
Next, forecasting CGS and SG&A:
Are they also seasonal?
29.5%
29.6%
29.9%
30.0%
29.7%
30.2%
30.5%
30.4%
31.6%
32.0%
31.2%
31.3%
32.9%
33.4%
33.3%
33.5%
31.9%
30.8%
30.8%
32.0%
32.7%
34.2%
33.6%
33.2%
20.3%
18.6%
20.8%
21.5%
19.2%
20.7%
21.0%
18.9%
21.3%
22.4%
19.7%
20.3%
22.9%
21.1%
22.4%
23.0%
20.5%
21.6%
21.9%
23.8%
22.5%
23.7%
22.8%
24.3%
15%
17%
19%
21%
23%
25%
27%
29%
31%
33%
35%
Jan-00
Apr-00
Jul-00
Oct-00
Jan-01
Apr-01
Jul-01
Oct-01
Jan-02
Apr-02
Jul-02
Oct-02
Jan-03
Apr-03
Jul-03
Oct-03
Jan-04
Apr-04
Jul-04
Oct-04
Jan-05
Apr-05
Jul-05
Oct-05
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20
Gross Margin and SGA Estimate
rates, implies 24.1%
SGA = (Q3 this year of 21.6) x (24.3/22.4) = 23.4%
go with 24%
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21
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So, my forecasted Sales and
EPS are…
Sales = $ 19,000,000
Net income = $1,216,679
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23
What are the analysts predicting?
http://biz.yahoo.com/z/a/h/hd.html
http://www.earningswhispers.com/stocks.asp?symbol=HD
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24
HD Earnings Surprise History
HOME DEPOT INC
Actual Mean Surprise
Jan-05 0.47 0.47 0.00
10/2004 0.60 0.57 0.03
7/2004 0.70 0.64 0.06
4/2004 0.49 0.43 0.06
1/2004 0.42 0.39 0.03
10/2003 0.50 0.46 0.04
7/2002 0.50 0.47 0.03
4/2002 0.36 0.33 0.03
1/2002 0.30 0.28 0.02
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Common behavior of quarterly earnings
Et+1 = Et-3 + .19(Et-1 Et-5) + et
Et+2 = Et-2 + .06(Et-1 Et-5) + et
Positive surprise
Positive surprise
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Abarbanell and Bernard, Journal of Finance 1992

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