AboutRobert Hanzel Expertise I can answer questions regarding most areas of consumer and commercial finance. I have extensive experience regarding various types of loans (commercial, consumer, USDA, SBA 504, SBA 7A, foreign), many investment vehicles, credit, economics, and banking. I am not an expert regarding tax structures and other tax issues and thus would not recommend asking tax related questions.
Experience Over 11 years Financial, Investigative, and Legal experience including loan review, due diligence, financial analysis, collections, and risk management. I have managed Credit Administration, Loan Administration, Credit Analysis, Credit Review, Liquidation Departments, Collections, and workouts
Organizations Both the Risk Management Association and the Bank Administration Institute.
Education/Credentials I have obtained both my Credit Risk Certification from the Risk Management Association and a Loan Review Certification from the Bank Administration Institute.
Expert: Robert Hanzel Date: 3/7/2007 Subject: Explain what this means
Question Hi,
Could you please explain what this means. I have a Business degree but it's been a long time and I embarrassed I don't know.
"Home Depot is now widely discussed as a potential private-equity buyout candidate because it earns 22% on shareholder equity and has lots of assets to hock. Today it sells at a below-market multiple of 14.4 and offers an above-average dividend yield of 2.2%."
Thanks so much
Answer Well, this breaks down into several parts so I will define each:
private equity takeout - another company, lender, individual, etc. will come in and purchase a large enough portion of the stock to take over a majority share and take the stock off of the market. This normally happens at a premium so it pays off for the current shareholder. The reason it is considered as such is because they have specific divisions that they can sell of and not sell the entire company off.
Market Multiple - this is the same thing as the P/E ratio which is a ratio that determines valuation. It is hard to use this ratio alone, but normally this determines whether a stock is properly values. The 14.4 P/E (multiple) is low compared to indsutry which suggests that the stock is currently undervalued.
Divident Yield - this is just the percentage of yield compared to the price. So, for the price you pay, you get 2.2% back as a dividend. While this isn't that high, it is for what they do and is considered above industry.
Let me know if this doesn't answer your question and I will be glad to help in anyway!
