Office Depot (ODP) Stock Slides Ahead of Earnings Report
NEW YORK (TheStreet) -- Office Depot (ODP) - Get Report stock is falling 2.43% to $7.43 in afternoon trading on Monday, before the company reports its 2015 third quarter financial results, expected on Tuesday before the market open.
The company is expected to post a year-over-year rise in earnings per share, but a decline in revenue for the latest quarter.
Analysts have estimated earnings of 16 cents per share, up from 10 cents per share that the company reported for the third quarter of last year.
Revenue is estimated to decline 7.6% year-over-year to $3.74 billion for the quarter, compared with $4.04 billion for the same quarter last year.
The office products retailer will not hold an earnings call because it is being acquired by Staples (SPLS) in a $6.3 billion transaction.
Last month, the companies agreed with the Federal Trade Commission to extend the regulatory review period for the acquisition until December 8.
The deal is approved in Australia, New Zealand and China, but is pending approval in the European Union, the U.S. and Canada.
Separately, TheStreet Ratings team rates OFFICE DEPOT INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
We rate OFFICE DEPOT INC (ODP) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, solid stock price performance and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including poor profit margins and weak operating cash flow.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 69.6% when compared to the same quarter one year prior, rising from -$191.00 million to -$58.00 million.
- Powered by its strong earnings growth of 69.44% and other important driving factors, this stock has surged by 48.53% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- OFFICE DEPOT INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, OFFICE DEPOT INC reported poor results of -$0.67 versus -$0.22 in the prior year. This year, the market expects an improvement in earnings ($0.46 versus -$0.67).
- Net operating cash flow has declined marginally to -$89.00 million or 1.13% when compared to the same quarter last year. Despite a decrease in cash flow OFFICE DEPOT INC is still fairing well by exceeding its industry average cash flow growth rate of -11.19%.
- The gross profit margin for OFFICE DEPOT INC is currently lower than what is desirable, coming in at 25.87%. Regardless of ODP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, ODP's net profit margin of -1.68% significantly underperformed when compared to the industry average.
- You can view the full analysis from the report here: ODP