Private Equity Gone Wild: Home Depot In Play?

| About: Home Depot, (HD)

Eddy Elfenbein submits: It's official. Private equity has officially gone bonkers. The big news on Friday was that some investors are interested in buying Home Depot (NYSE:HD).

That's right, Home Freakin Depot. Private investors are thinking of buying a Dow component. Dear lord! And it's one of the real ones, not Alcoa (NYSE:AA).

In my mind, Home Depot is still cheap. The earnings have been disappointing, but nothing horrible. HD is going to make about $6 billion this year. It pays a good dividend (raised by 50% twice this year), and the company is working to alter its business model.

The question we have to ask is if HD can change from a company that grew 18% a year to a company that will grow by 10%-12% a year. I think Nardelli realizes the problems HD faces.

The Home Depot expects 12% sales growth next year, and EPS growth of 4%-5%. But then what?

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