Jul 8, 2014
Zacks Investment Research upgraded
Office Depot, Inc.
) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
It seems that Office Depot's strategic measures have finally
started paying off. In 2013, the company had merged with Office Max
in order to better compete with rivals like
). Subsequent to this, the company announced closure of 400
overlapping locations across North America by 2016 to generate cost
savings of $75 million annually. It expects to close 150 locations
The success of these initiatives is well reflected in the company's
better-than-expected first quarter 2014 results. Office Depot also
provided an upbeat guidance and increased synergies expectations
from the merger for the year.
Office Depot's adjusted earnings per share came in at 7 cents,
rising over twofold from the Zacks Consensus Estimate and proforma
earnings per share of 3 cents. Further, total revenue of $4,354
million increased about 60% from the prior-year quarter and
surpassed the Zacks Consensus Estimate of $4,288 million. Most of
the key metrics including operating income depicted an upward
trend, benefiting largely from the merger.
As a result, the company has provided encouraging outlook for the
year. Including the synergies from store closures, management
expects merger synergies to be $675 million by 2016, up from
earlier expectation of $600 million. Out of total synergies, nearly
$180 million will be realized in 2014. Moreover, driven by higher
synergies, Office Depot now expects adjusted operating income to be
at least $160 million, up from the earlier expectation of at least
All these positive factors triggered an uptrend in the Zacks
Consensus Estimate for 2014 which increased 45.5% to 16 cents per
share over the last 90 days.
Other Stocks to Consider
Another stock worth considering is
Barnes & Noble, Inc.
) which carries a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
OFFICE DEPOT (ODP): Free Stock Analysis Report
STAPLES INC (SPLS): Free Stock Analysis Report
AMAZON.COM INC (AMZN): Free Stock Analysis
BARNES & NOBLE (BKS): Free Stock Analysis
To read this article on Zacks.com click here.