Trade-Ideas LLC identified

Office Depot

(

ODP

) as a "perilous reversal" (up big yesterday but down big today) 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 $109.4 million.
  • ODP has traded 69,073 shares today.
  • ODP is down 5% today.
  • ODP was up 7.7% yesterday.

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More details on ODP:

Office Depot, Inc., together with its subsidiaries, supplies office products and services. It operates in three segments: North American Retail, North American Business Solutions, and International. ODP has a PE ratio of 583. Currently there are 3 analysts that rate Office Depot a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Office Depot has been 7.9 million shares per day over the past 30 days. Office Depot has a market cap of $3.8 billion and is part of the services sector and specialty retail industry. The stock has a beta of 2.28 and a short float of 2% with 0.70 days to cover. Shares are up 22.5% 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 impressive record of earnings per share growth, compelling growth in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins.

Highlights from the ratings report include:

  • OFFICE DEPOT INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, OFFICE DEPOT INC turned its bottom line around by earning $0.01 versus -$0.67 in the prior year. This year, the market expects an improvement in earnings ($0.48 versus $0.01).
  • 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 117.8% when compared to the same quarter one year prior, rising from -$84.00 million to $15.00 million.
  • The debt-to-equity ratio is somewhat low, currently at 0.94, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.81 is somewhat weak and could be cause for future problems.
  • The gross profit margin for OFFICE DEPOT INC is currently lower than what is desirable, coming in at 25.22%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.43% trails that of the industry average.
  • ODP's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 32.49%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.

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