Trade-Ideas: Staples (SPLS) Is Today's Pre-Market Mover With Heavy Volume Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Staples ( SPLS) as a pre-market mover with heavy volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Staples as such a stock due to the following factors:

  • SPLS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $88.6 million.
  • SPLS traded 1.1 million shares today in the pre-market hours as of 8:12 AM, representing 19.9% of its average daily volume.

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More details on SPLS:

Staples, Inc., together with its subsidiaries, operates as an office products company. It operates in three segments: North American Stores & Online, North American Commercial, and International Operations. The stock currently has a dividend yield of 2.9%. Currently there are 6 analysts that rate Staples a buy, 1 analyst rates it a sell, and 8 rate it a hold.

The average volume for Staples has been 7.0 million shares per day over the past 30 days. Staples has a market cap of $11.2 billion and is part of the services sector and specialty retail industry. The stock has a beta of 1.54 and a short float of 9.3% with 10.83 days to cover. Shares are up 47.7% year to date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Staples as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • Compared to its closing price of one year ago, SPLS's share price has jumped by 45.60%, exceeding the performance of the broader market during that same time frame. 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.
  • Net operating cash flow has significantly increased by 136.67% to $347.57 million when compared to the same quarter last year. In addition, STAPLES INC has also vastly surpassed the industry average cash flow growth rate of 5.74%.
  • The current debt-to-equity ratio, 0.32, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.71 is somewhat weak and could be cause for future problems.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Specialty Retail industry and the overall market, STAPLES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for STAPLES INC is currently lower than what is desirable, coming in at 27.72%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.92% trails that of the industry average.

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