Staples Q2 Profit Matches View, but Revenue Falls Short (SPLS)

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Office supply giant Staples, Inc. ( SPLS ) on Thursday said its second quarter profit rose 40% from last year, matching analyst expectations, but its revenue along with third quarter and full-year forecasts fell shy of Wall Street's view.

The Framingham, MA-based company reported second quarter net income of $129.8 million, or 18 cents a share, compared with $92.4 million, or 13 cents per share, in the year-ago period. Excluding one-time items, adjusted profit was 20 cents per share.

Sales were mostly flat from last year at $5.53 billion.

On average, Wall Street analysts expected a matching profit of 20 cents per share, on higher revenue of $5.64 billion.

Looking ahead, the company said a higher tax rate would negatively impact third quarter and full-year earnings. It now expects third quarter profit of 39 cents to 41 cents per share, excluding items, which would miss analyst expectations of 43 cents.

For the full year, Staples cut its forecast to $1.25 to $1.29 per share, excluding items, which would also miss analysts' forecast of $1.35 per share.

Staples shares fell 41 cents, or -2.1%, in premarket trading Thursday.

The Bottom Line
We have avoided shares of SPLS since our early June 2008 coverage began, when the stock was trading at $23.23. The company has a dividend yield of 1.83%, based on last night's closing stock price of $19.65. The stock has technical support in the $18 price area. If the stock can continue to firm up, we see overhead resistance around the all-time high levels of $21-$23 a share. We would remain on the sidelines for now.

Staples, Inc. ( SPLS ) is not recommended at this time, holding a Dividend.com 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 The NASDAQ OMX Group, Inc.

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