OfficeMax Inc.
(
OMX
) is slated to report its second-quarter 2012 financial results on
Thursday, August 2. The current Zacks Consensus Estimate for the
quarter is 7 cents a share that remained flat with the prior-year
quarter's earnings.
The estimates in the current Zacks Consensus range between a low
of 5 cents and a high of 8 cents a share. The Zacks Consensus
Estimate for revenue is pegged at $1,638 million for the quarter
under discussion.
Recap of First-Quarter 2012
OfficeMax posted better-than-expected first-quarter 2012
results. The quarterly earnings of 23 cents a share beat the Zacks
Consensus Estimate of 16 cents and rose substantially from 13 cents
earned in the prior-year quarter on the back of effective cost
management and marginal growth in the top line.
Total sales inched up 0.5% to $1,872.9 million from the same
quarter last year, and came ahead of the Zacks Consensus Estimate
of $1,867 million.
OfficeMax
Contract
segment sales grew 3.8% to $960.6 million in the quarter, whereas
Retail
segment sales dipped 2.7% to $912.3 million, reflecting a decline
of 2.1% in comparable-store sales due to lower store
transactions.
Zacks Agreement & Magnitude
No movement was noticed in the Zacks Consensus Estimate for the
second quarter either in the last 7 or 30 days, as the downward
revision in the estimate made by 1 out of 10 analysts covering the
stock in the respective periods did not have a material impact.
Earnings Surprise History
With respect to earnings surprises, OfficeMax has topped the
Zacks Consensus Estimate by an average of 18.1% in the trailing
four quarters. Given the past performance, we believe that
OfficeMax may outperform the Zacks Consensus Estimate in the second
quarter of 2012 as well.
Let's Conclude
The change in the demand for office supplies products and
services remains one of the indicators that describe the health of
the economy. The economy has not completely awakened from a state
of hibernation, and amid such a scenario OfficeMax has to walk the
tight rope to juggle with any unprecedented situation that may
restrict its growth prospects.
OfficeMax provides office supplies and paper, print and document
services, technology products and solutions as well as office
furniture to business firms, government organizations and other
retail consumers.
As the recovery in the economy still remains sluggish, consumers
and small businesses remain frugal about big-ticket spending like
business machines and other durables. Therefore, we believe that
the demand for office products is closely tied to the health of the
economy.
Consequently, OfficeMax is repositioning itself to stay afloat
amidst a difficult consumer environment. The company is containing
costs, closing underperforming stores and focusing on innovative
products and services, which should all contribute to margin
improvements.
The company also focuses on optimal store sites in order to
boost store productivity. Moreover, OfficeMax is committed to
improve sales per square foot by increasing customer traffic and
converting them into potential buyers by targeted advertising,
ongoing sales training and customer-oriented initiatives. The
company has initiated control center technology services to assist
customers with PC maintenance or removal of viruses.
Genuine efforts are implemented to combat the tough economy.
Business budgets remain tight, consumers remain cautious than ever
before and companies are trying hard to navigate through the
challenging maze.
Going by the pulse of the economy, we prefer to maintain our
long-term Neutral recommendation on the stock. Moreover, OfficeMax,
which competes with
Office Depot Inc.
(
ODP
) and
Staples Inc.
(
SPLS
), holds a Zacks #3 Rank that translates into a short-term Hold
rating.
OFFICE DEPOT (ODP): Free Stock Analysis Report
OFFICEMAX INC (OMX): Free Stock Analysis Report
STAPLES INC (SPLS): Free Stock Analysis Report
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