We Are Placing HD Supply Under Review After the Company Announced the Sale of Its Waterworks Segment
HD Supply shares traded down nearly 20% on June 6 after the narrow-moat industrial distributor announced fiscal first-quarter results, the sale of its $2.6 billion Waterworks segment, and the authorization of a $500 million buyback program. We are placing HD Supply under review while we incorporate the sale into our valuation model. Based on our initial analysis, we expect to lower our fair value estimate by 5% to 10% due to the factors detailed below; but we are maintaining our moat rating. We ...HD Supply Holdings is a holding company. Through its subsidiaries, the company is an industrial distributor in North America. The company's segments include: Facilities Maintenance and Construction and Industrial. The company's Facilities Maintrnance segment distributes maintenance, repair and operations products, provides services and fabricates custom products. Products include electrical and lighting items, and plumbing, heating, ventilating, and air conditioning products. The company's Construction and Industrial segment distributes hardware, tools and materials to non-residential and residential contractors. Products include tilt-up brace systems, forming and shoring systems, concrete chemicals, and cutting tools.
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