As we’ve been telling you all day, CEO Bob Nardelli is out at Home Depot after six stormy years at the helm. How should investors play the company’s stock now? We had two fund managers who watch the company closely on "Street Signs" to find out.
Brian Barish is portfolio manager of the Cambiar Opportunity Fund, which owns 7 million Home Depot shares. “Home Depot has clearly been penalized by the market because of Mr. Nardelli," he says, and "having him out of the way probably clears the way a little bit" for share price to increase.
But as an investor, Barish doesn’t think Nardelli did a bad job during his tenure. “Home Depot is a hardware company, and the fact that the company underperformed [during the housing slump] is not a real big shock.”
Michael Cox is senior research analyst at Piper Jaffray. He has an "outperform" rating on Home Depot.
If you look at the growth between Home Depot and its competitor Lowe’s , “Home Depot has seen slowing store growth, and investors like store growth. So the price-earnings multiple has compressed as store growth has slowed," Cox says.
Cox added that Nardelli and his team have reinvented the company, moving into wholesale distribution as well as international markets, and that’s where investors can get excited about the company.
Analyst disclosure: Brian Barish’s firm owns shares of HD.