Out Fox The $treet

Home Depot had a surprising quarterly report with only in line numbers. The home improvement retailer has seen a period of strong EPS growth topped by further multiple expansion. Several signs are starting to point towards the end of the glory days. Home Depot (NYSE: HD )  continued a recent tradition of raising EPS estimates, but the stock is trading down on the news. After years of outsized stock gains, one has to wonder if the glory days are over. Read the full article on Seeking Alpha.  Disclosure: No position. Please review the disclaimer page for more details. 

Home Depot (HD) announced after the close yesterday that they would issue $2B in debt to refinance $1B of senior notes and to accelerate a repurchase $1B of outstanding shares. Typically we're big fans of stock buybacks and place a major emphasis on stock re purchasers via the Net Payout Yields folio. Issuing debt though to repurchase shares aren't as attractive. Its the use of free cash flow and cash on hand that makes a stock appealing not debt. When a company can afford a large percentage buyback, then it clearly signals that the market likely misunderstands a stocks future. HD has been one of the top investments in the NPY folio for a while since they have a nice 2.8% dividend combined with a history of strong buybacks. The company has already announced the intention to buyback $2.5B of stock this year placing the buyback yield at roughly 4% for this $61B market cap stock. Combined with the dividend, HD has a NPY of nearly 7% making them very attractive. This debt enhan...