Office Depot (ODP) Stock Sinks As Market Gains: What You Should Know

Zacks Equity Research
·3-min read

Office Depot (ODP) closed at $47.48 in the latest trading session, marking a -0.06% move from the prior day. This change lagged the S&P 500's daily gain of 0.36%. At the same time, the Dow lost 0.12%, and the tech-heavy Nasdaq gained 0.69%.

Coming into today, shares of the office supply retailer had gained 65.94% in the past month. In that same time, the Retail-Wholesale sector gained 2.36%, while the S&P 500 gained 4.27%.

ODP will be looking to display strength as it nears its next earnings release. On that day, ODP is projected to report earnings of $1.59 per share, which would represent year-over-year growth of 32.5%. Meanwhile, our latest consensus estimate is calling for revenue of $2.34 billion, down 6.62% from the prior-year quarter.

It is also important to note the recent changes to analyst estimates for ODP. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. ODP currently has a Zacks Rank of #3 (Hold).

Digging into valuation, ODP currently has a Forward P/E ratio of 8.32. This represents a discount compared to its industry's average Forward P/E of 11.63.

Also, we should mention that ODP has a PEG ratio of 1.22. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Retail - Miscellaneous was holding an average PEG ratio of 1.65 at yesterday's closing price.

The Retail - Miscellaneous industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 69, putting it in the top 28% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow ODP in the coming trading sessions, be sure to utilize

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