Office Depot Inc Stock Upgraded (ODP)

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.

NEW YORK ( TheStreet) -- Office Depot (NYSE: ODP) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, impressive record of earnings per share growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including poor profit margins and weak operating cash flow.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

Highlights from the ratings report include:
  • 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 359.9% when compared to the same quarter one year prior, rising from -$61.92 million to $160.90 million.
  • 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 swung to a loss, reporting -$0.40 versus $0.16 in the prior year. This year, the market expects an improvement in earnings ($0.00 versus -$0.40).
  • ODP, with its decline in revenue, underperformed when compared the industry average of 19.5%. Since the same quarter one year prior, revenues slightly dropped by 2.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The gross profit margin for OFFICE DEPOT INC is currently lower than what is desirable, coming in at 26.01%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 6.14% trails that of the industry average.
  • Net operating cash flow has significantly decreased to -$25.56 million or 111.83% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

Office Depot, Inc., together with its subsidiaries, supplies office products and services. Office Depot has a market cap of $1.53 billion and is part of the services sector and specialty retail industry. Shares are up 61.9% year to date as of the close of trading on Friday.

You can view the full Office Depot Ratings Report or get investment ideas from our investment research center.

3x UPSIDE POTENTIAL: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more..
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

If you liked this article you might like

Mellanox Must Hike 2018 Targets or Face Activist Escalation, M&A

Mellanox Must Hike 2018 Targets or Face Activist Escalation, M&A

Stop the Insanity Amazon Will Not Be Buying Target

Stop the Insanity Amazon Will Not Be Buying Target

'Tis The Season of the Retail Apocalypse -- And There's an ETF for That

'Tis The Season of the Retail Apocalypse -- And There's an ETF for That

Trump, China, Fox and Disney - 5 Things You Must Know Before the Market Opens

Trump, China, Fox and Disney - 5 Things You Must Know Before the Market Opens

Office Depot Launches BizBox for Startups, Small Businesses

Office Depot Launches BizBox for Startups, Small Businesses