On Mar 18, 2014, Zacks Investment Research downgraded
Office Depot, Inc.
) to a Zacks Rank #5 (Strong Sell). The shares of this office
supplies retailer have tumbled 14.4% year-to-date.
Why the Downgrade?
Estimates for Office Depot have been showing a downtrend since
the company posted disappointing fourth-quarter 2013 results on
Feb 25, 2014. Over the past few quarters the company has been
struggling to regain its momentum.
The soft industry trends and severe competition from online
giants resulted in declining sales at Office Depot. The company
recently merged with OfficeMax to capture incremental market
share, streamline cost structure and compete better with industry
Looking at the company's performance in the trailing four
quarters, it has missed the Zacks Consensus Estimate by an
average of 122.2%. In the most recent quarter, earnings fell
short of the estimate by 200%.
Office Depot posted adjusted fourth-quarter 2013 loss per
share of 3 cents as against the Zacks Consensus Estimate of
earnings of 3 cents and break-even results in the prior-year
quarter. Revenues of $3,486 million also fell short of the Zacks
Consensus Estimate but grew 33% year over year.
Further, management foresees headwinds across product lines
and distribution channels during 2014. As a result, the company
projects total revenue to be lower than 2013 pro-forma combined
Given the uncertainties, analysts have become less
constructive on the stock's future performance. This is evident
from the movement witnessed in the Zacks Consensus Estimate that
tumbled 56% to 11 cents for fiscal 2014 and 40% to 33 cents a
share for fiscal 2015 in the past 30 days.
Other Stocks to Consider
Not all retail stocks are performing as disappointingly as
Office Depot. Some better-ranked stocks include
Barnes & Noble, Inc.
) carrying a Zacks Rank #1 (Strong Buy), while
) hold a Zacks Rank #2 (Buy).
BARNES & NOBLE (BKS): Free Stock Analysis
ITOCHU CORP (ITOCY): Get Free Report
KINGFISHER -ADR (KGFHY): Get Free Report
OFFICE DEPOT (ODP): Free Stock Analysis
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