Staples Shares Get Clipped: What You Need to Know

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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: Office supply retail chain Staples (NAS: SPLS) seems to have misplaced its easy button. The stock is currently down 10% following its fourth-quarter earnings results.

So what: For the quarter, Staples reported a profit of $0.41 per share, meeting analysts' expectations, while clocking in with a modest 2% rise in total revenue. Its North American market saw same-store sales increase 2%, with domestic delivery revenue also up 2%. Overseas revenue was a disappointment with European same-store sales dropping 9%.

Now what: Today's results are clearly disappointing, especially given that peers OfficeMax (NYS: OMX) and Office Depot (NYS: ODP) handily beat Wall Street's EPS estimates when they reported their results. But when push comes to shove, Staples maintains the clear No. 1 market share in this sector, and I continue to see value in the company. The company's fiscal 2012 guidance calls for a high single-digit increase over the $1.37 it earned in 2011, placing it at a forward P/E of between nine and 10. This is definitely a company that value investors and income seekers would be wise to add to their watchlist.

Craving more input? Start by adding Staples to your free and personalized watchlist, so you can keep up on the latest news with the company.

At the time this article was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. The Motley Fool owns shares of Staples. Motley Fool newsletter services have recommended buying shares of Staples. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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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