Andrew Horowitz

Is Home Depot's Share Buyback At Risk?

Todd:

Excellent point and right on the money. I have been pounding the table regarding this issue. It seems to me if you attribute EPS growth to buybacks (enormous buybacks) and all eyes are on earnings, I question what will happen when, and if, buybacks stop...

A great article was written by Howard Silverblatt, Senior Market Analyst at S&P that shows the extent of the buybacks in the US markets. Would you be interested to find out that in 2006 on share buybacks within S&P 500 companies were $432 billion than the United States government spent on Medicare $408 billion? 2007 is looking to smash all records....

Also according to S&P, "buybacks, while adding to short-term returns, are temporary in nature if the shares are not retired - which they have not been. Cash build-ups that are now being used to supplement earnings via interest income and reduce share count are not a substitute for operating earning and, as such, should not be priced into future earnings or multiples."

Link to S&P article: www2.standardandpoors....;vlang=en

Link to Podcast with S&P's Howard Silverblatt: www.thedisciplinedinve.../

Something to ponder... Where do we go from here?

Andrew