Office Depot Shares Popped: What You Need to Know
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of office supply chain Office Depot (NYS: ODP) surged 14% on Tuesday after the company's quarterly results easily topped Wall Street expectations.
So what: The weak economy has weighed heavily on Office Depot in recent years, but today's big fourth-quarter beat -- adjusted EPS of $0.03 versus the breakeven consensus -- suggests that things are finally starting to bottom. In fact, smaller rival OfficeMax also posted market-topping results last week, giving investors plenty of good vibes about the entire space.
Now what: Looking ahead, analysts still expect full-year EPS of roughly $0.06. "I'm pleased with both the traction we're getting in improving our North American businesses and the restructuring actions being taken in the International Division," said CEO Neil Austrian. "I believe that our results are a testament to our improving execution across the enterprise and our focus on fewer initiatives." Given the company's paltry margins and erratic competitive position, however, Office Depot remains a questionable long-term opportunity.
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At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.
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