Office Depot Beats Expectations but Takes a Step Back Anyway

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Office Depot (NYS: ODP) reported earnings on Feb. 28. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Office Depot met expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue was unchanged and GAAP earnings per share increased. The non-GAAP profit was a surprise, as analysts had predicted a loss.

Gross margins improved, operating margins dropped, and net margins expanded.

Revenue details
Office Depot booked revenue of $2.97 billion. The 14 analysts polled by S&P Capital IQ expected a top line of $3.00 billion on the same basis. GAAP reported sales were 0.3% higher than the prior-year quarter's $2.96 billion.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Non-GAAP EPS came in at $0.03. The 18 earnings estimates compiled by S&P Capital IQ predicted -$0.01 per share on the same basis. GAAP EPS were $0.04 for Q4 versus -$0.39 per share for the prior-year quarter.

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Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 30.3%, 170 basis points better than the prior-year quarter. Operating margin was 0.4%, 10 basis points worse than the prior-year quarter. Net margin was 0.7%, 410 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $2.95 billion. On the bottom line, the average EPS estimate is $0.03.

Next year's average estimate for revenue is $11.46 billion. The average EPS estimate is $0.09.

Investor sentiment
The stock has a one-star rating (out of five) at Motley Fool CAPS, with 487 members out of 626 rating the stock outperform, and 139 members rating it underperform. Among 186 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 145 give Office Depot a green thumbs-up, and 41 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Office Depot is hold, with an average price target of $3.38.

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At the time this article was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. 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 Motley Fool has a disclosure policy.

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