The ratings on Atlanta-based Home Depot Inc. reflect our belief that profitability and credit measures should remain near current levels despite our expectation for weak home improvement industry demand and the potential for increased share repurchase activity. The company's strong business risk profile reflects its no. 1 position as the largest home improvement retailer in the world supported by its substantial U.S. store footprint and recognized name, cost reductions initiatives that have limited profit erosion through the economic downturn, and meaningful free cash flow generating ability. Risk factors include the weak state of the U.S. housing market, which could experience additional adversity at least over the near term (next 12 months) partly due to the unfolding foreclosure crisis, intense competition
