Trade-Ideas: Office Depot (ODP) Is Today's Weak On High Relative Volume Stock

Trade-Ideas LLC identified Office Depot (ODP) as a weak on high relative volume candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

Office Depot

(

ODP

) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Office Depot as such a stock due to the following factors:

  • ODP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $32.5 million.
  • ODP has traded 1.8 million shares today.
  • ODP is trading at 2.60 times the normal volume for the stock at this time of day.
  • ODP is trading at a new low 3.01% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on ODP:

Office Depot, Inc., together with its subsidiaries, supplies office products and services. Currently there are 3 analysts that rate Office Depot a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Office Depot has been 7.5 million shares per day over the past 30 days. Office Depot has a market cap of $3.9 billion and is part of the services sector and specialty retail industry. The stock has a beta of 2.37 and a short float of 3.8% with 4.22 days to cover. Shares are down 20.6% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Office Depot as a

hold

. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and poor profit margins.

Highlights from the ratings report include:

  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • ODP, with its decline in revenue, underperformed when compared the industry average of 8.6%. Since the same quarter one year prior, revenues slightly dropped by 9.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Net operating cash flow has decreased to $135.00 million or 31.47% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Specialty Retail industry. The net income has significantly decreased by 80.0% when compared to the same quarter one year ago, falling from $30.00 million to $6.00 million.

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