Home DepotAn Owner's Manual for Investors

you're entitled to a share of its earnings.

As an owner of Home Depot's stock

NOT TO SCALE

obviously

$7

Billion

Home Depot's

12-Month

Earnings

Home Depot's

Earnings

per share

$5.34

If you divide Home Depot's share

price by its earnings per share (EPS),

you get its price-to-earnings ratio.

P/E

Ratio=

Share Price

EPS25.10=

$133.97

$5.34=

This is how much it costs to buy $1

of Home Depot's annual earnings.

A higher P/E ratio implies a lower

potential return.

1

10

100

1,000

100 Biggest S&P Companies

P/E

Rati

o

Most companies have P/E ratios

between 12 and 30

What is a Typical Stock's P/E Ratio?

You can also use Home Depot's P/E

ratio to derive its earnings yield.

1

25.10 4.0%

Home

Depot's

Earnings

Yield

1

P/E Ratio= ==

This helps you compare a stock

to other types of investments,

such as bonds and real estate.

3.98%

6.63%

4.33%

2.90%2.45%2.21%

Home

Depot's

Earnings

Yield

Class A

Office

Building

Cap Rate

S&P 500

Earnings

Yield

10-Year

AAA Corp.

Bonds

5-Year

CDs

10-Year

Treasuries

Average Rates of Return

Of course, if you own one share of

Home Depot stock, you don't get a

check each year for its EPS.

You receive quarterly dividends

instead, which typically account

for only a portion of total earnings.

42%

Home Depot's Payout RatioThe payout ratio is the percent of earnings

paid as dividends. Anywhere from 30% to

70% is normal.

1.76%Home Depot's Dividend Yield

Home

Depot's

Dividend

Yield

=

Dividend

per Share

Share

Price

=$2.36

$133.97= 1.76%

You can then use this to compare

stocks based on their income-

generating potential.

1.76%

3.57%3.33%

2.72%

1.64%

0.71%

Home

Depot

Exxon Walmart Wells

Fargo

Comcast Visa

Representative Dividend Yields

Home Depot also buys back its own stock.

This reduces its share count, which

increases the ownership interest

of each remaining share.

$6.3

Billion

-5.8%

Home Depot's

Buybacks

(TTM)

Change in

Home Depot's

Share Count

(TTM)

Home Depot's stock?So, what does the future hold for

Home

Depot

307%

S&P 500

119%

-100%

-50%

0%

50%

100%

150%

200%

250%

300%

350%

Today20132011200920072005

If the Past is Prologue...Total return since Jan. 1, 2005

Home Depot's earnings to grow.

While it's impossible to predict the

future with precision, analysts expect

$5.33

$6.14

Current Fiscal Year Next Fiscal Year

Average Earnings per Share Estimate Among Wall

Street Analysts

Divining Home Depot's Future

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