The analysts believe home improvement is one of the best businesses in retail, given the lack of serious competitive threats (there is no Wal-Mart concern here), the importance of the home to the typical consumer, and market share consolidation between Home Depot and Lowe’s, which is being accelerated by the downturn.  The analysts believe management is pulling the right levers to position the company to emerge from the current downturn a leaner, stronger, and more profitable organization. 

As the home improvement market recovers, analysts believe HD will generate incremental earnings leverage from the various longer-term initiatives that it is pursuing, including upgrading its supply chain and distribution network, implementing IT infrastructure, and improving its merchandising capabilities.

Moreover, HD dramatically reduced new store growth, refocused resources and attention on its existing asset base, and remained committed to invest in five key priorities - associate engagement, shopping environment, product availability, product excitement, and owning the Pro.

Analysts believe management is running the business for the long term by dropping store counts, cutting capex, and closing low return stores.