Why Office Depot (ODP) Stock Is Slipping Today

NEW YORK (TheStreet) -- Shares of Office Depot Inc  (ODP)  are slipping, down 2.71% to $5.74 this afternoon, following the company's announcement that it is transferring the listing of its common stock to the NASDAQ Global Select Market from the New York Stock Exchange.

The office supplies company will cease trading on the NYSE at the close of business on Sept. 25, and will start trading on NASDAQ the following day.

The company will keep its current ticker symbol "ODP" when trading begins on NASDAQ.

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Office Depot has been rumored to merge with competitor Staples  (SPLS) for the past few weeks.

Separately, TheStreet Ratings team rates OFFICE DEPOT INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate OFFICE DEPOT INC (ODP) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance 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, weak operating cash flow and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • ODP's very impressive revenue growth greatly exceeded the industry average of 0.1%. Since the same quarter one year prior, revenues leaped by 58.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, ODP's share price has jumped by 27.95%, 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.
  • OFFICE DEPOT INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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 continued to lose money by earning -$0.22 versus -$0.40 in the prior year. This year, the market expects an improvement in earnings ($0.17 versus -$0.22).
  • Net operating cash flow has significantly decreased to -$88.00 million or 28942.90% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much 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 252.3% when compared to the same quarter one year ago, falling from -$54.21 million to -$191.00 million.
  • You can view the full analysis from the report here: ODP Ratings Report

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