After-Hours Trading Shows Office Depot (ODP) Lagging

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 Office Depot ( ODP) as a post-market laggard 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 $56.8 million.
  • ODP is down 2.8% today from today's close.

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More details on ODP:

Office Depot, Inc., together with its subsidiaries, supplies office products and services. Currently there are 2 analysts that rate Office Depot a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for Office Depot has been 8.7 million shares per day over the past 30 days. The stock has a beta of 3.12 and a short float of 37.1% with 6.62 days to cover. Shares are up 73.2% year to date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Office Depot as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins and generally high debt management risk.

Highlights from the ratings report include:
  • 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, OFFICE DEPOT INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for OFFICE DEPOT INC is rather low; currently it is at 24.54%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.24% is significantly below that of the industry average.
  • ODP's debt-to-equity ratio of 0.68 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that ODP's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.64 is low and demonstrates weak liquidity.
  • The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Specialty Retail industry average. The net income increased by 5.5% when compared to the same quarter one year prior, going from -$57.38 million to -$54.21 million.
  • ODP, with its decline in revenue, underperformed when compared the industry average of 19.6%. Since the same quarter one year prior, revenues slightly dropped by 3.5%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.
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