Staples Q1 Results Beat View, but Outlook Disappoints (SPLS)


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Office supply giant Staples, Inc. ( SPLS ) on Thursday posted better-than expected first quarter earnings results, but its relatively cautious second quarter and full-year outlook sent its shares lower in premarket trading.

The Framingham, MA-based company reported first quarter net income of $188.8 million, or 26 cents a share, compared with $143 million, or 20 cents per share, in the year-ago period. Excluding special items, adjusted profit was 28 cents per share.

Sales rose more than 4% from last year, to $6.06 billion.

On average, Wall Street analysts expected a lower profit of 26 cents per share, on $6.03 billion in revenue.

Looking ahead, the company predicted second quarter profit to range from 18 to 20 cents per share, and adjusted full-year results of $1.25 to $1.33. Those estimates could miss those of analysts, who currently expect 20 cents for the second quarter and $1.33 per share for the year.

Staples shares fell 54 cents, or -2.5%, in premarket trading Thursday.

The Bottom Line
We have avoided shares of Staples since our early June 2008 coverage began, when the stock was trading at $23.23. The company has a dividend yield of 1.67%, based on last night's closing stock price of $21.54. The stock has technical support in the $19 price area. If the stock can continue to firm up, we see overhead resistance around the all-time high levels of $24-$25 a share. We would remain on the sidelines for now.

Staples, Inc. ( SPLS ) is not recommended at this time, holding a DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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