Office Depot Inc.
)- one of the leading suppliers of office products and services
across the globe - is expected to report its third quarter 2012
financial results on Tuesday, October 30, 2012.
The current Zacks Consensus Estimate for the quarter stands at
1 cent per share, which is above the break-even earnings reported
in the comparable prior-year period. Revenue, as per the Zacks
Consensus Estimate, is pegged at $2,731 million.
Last Quarter Recap
Office Depot posted second-quarter 2012 results with a loss of
14 cents a share that sharply widened from a loss of 6 cents
delivered in the year-ago quarter, and also fared worse than the
Zacks Consensus Estimate of a loss of 9 cents. The dismal results
were due to weak top-line performance on account of soft sales in
North America and Europe.
The company's total revenue of $2,507.2 million decreased 7%
from the prior-year quarter and also fell short of the Zacks
Consensus Estimate of $2,584 million. In constant currency,
revenue slipped 5%.
Agreement of Estimate Revision
For the to-be-reported quarter, the estimates remain unchanged
with no estimate going up or down (out of 14) over the last 30
days or 7 days. Furthermore, the story remains the same for
fiscal 2012. The estimates were kept intact mainly due to lack of
news or event, which could have a direct or indirect impact on
Magnitude of Estimate Revision
For the third quarter 2012, the estimate remains stagnant at 1
cent per share over the last 7 or 30 days, mainly due to the
absence of estimate revision, whereas for 2012, the estimate
remained unchanged at a loss of 3 cents over the last 7 or 30
Mixed Earnings Surprise History
With respect to earnings surprise, Office Depot has missed the
Zacks Consensus Estimate in two quarters over the last four
quarters, whereas the estimates met and surpassed in one quarter
each. The average remained at a negative of 77.8%.
Office Depot is containing costs, closing underperforming
stores, managing inventory and focusing on providing innovative
products and services, which should all contribute to margin
improvement. In order to increase store sales productivity, the
company is concentrating on remodeling and introducing smaller
format stores. However, we still remain cautious about the
macroeconomic environment, with small businesses and consumers
still remaining watchful on their spending.
As a result, we maintain our long term 'Neutral'
recommendation on the stock. However, Office Depot, which
), carries a Zacks #5 Rank, implying a short-term 'Strong Sell'
rating on the stock for the coming 1-3 months, and reflects
negative average earnings surprise.
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