The stock price is now 37.3% below where it was
at the start of the year and 25% below where I
bought it just a month ago. Is there any reason for this
stock to be punished this way? All I know of is false
rumors and one man's opinion at DLJ. Do they really
carry that much weight?
OMX and SPLS have slowly
started moving up, but ODP continues to slip.
anyone has any reasons that can be discussed here,
please bring them forth.
It makes no sense. Really. None at all. "It is
not logical". As I said before, that's the bad news.
The good news is that there is absolutely no known
viable reason that ODP won't head on back up. Question
is, when? Answer is, who knows? ........... Because
........ it ........ makes ........... no ........ sense.
I have traded this stock many times in the past
year. I thought I had the deal of deals to get in at 17
7/8. Fed policy does worry me, but seriously how low
can it go. SPLS is 50 P/E. We are 24. If we hold we
will get our money back.
Happy Friday all.
I was very interested in your analysis of ODP's
opening more stores or stock buy back. I bought this
stock at 21 but its fundamentals and stock action made
me decide very quickly that there must be something
I missed, and I sold about 20. A small loss
considering where the stock is today. I would like your in
put as to what you consider the future aspects, and
profits going forward will be for this company and in
what kind of time frame work.I can't find anything
wrong with this company, except wallstreet
recognition.I defer to your judgement. Thank you.
Office Depot (ODP) 13 3/4. Beaten up so badly
it's worth a look. After warning following the market
close yesterday, Office Depot traded down to about 10
1/2 in after hours trading. Then this morning,
PaineWebber downgraded the stock from "buy" to "attractive".
This was a $25 stock just five months ago, but since
then it has been straight down. Frankly, this is
surprising (in hindsight), because ODP posted had steady,
decent results for years, and seemed to be reasonably
well managed. The stock had not been a superstar, but
had put in a consistent performance over the past few
years. In fact, the numbers ODP are now talking about
aren't all that terrible. ODP says that second half
earnings will be in the $0.38 to $0.40 per share range
rather than the $0.50 to $0.52 per share range Wall
Street had been expecting. We've seen a lot worse
warnings. And, even if earnings come at $0.38 per share,
that would still leave 1999 earnings at $0.82 per
share. Not too bad for a 10 1/2 dollar stock, because
that puts its good old fashioned price/earnings
multiple at a reasonable 12.8. Multiples like that are
hard to find these days. ODP earned a split-adjusted
operating profit of $0.79 per share last year, so that
still represents a bit of growth for the full year,
although results for the second half of the year would be
about flat. Given all this, Briefing.com is going to
stick our neck out a bit for a beaten up stock. ODP is
not going to turn into a hot stock soon, but there is
some value here. Concerns include the effect of the
Internet on their bricks and mortar business and the fact
that there have been too many write-offs lately.
However, the worst may now be in this stock and it is
worthy of consideration for patient investors. - DG
VKNG is still the major mail order force in
Europe (associates in the UK tell me that SPLS's Quill
launch over there was pretty uninspiring in terms of
customer service) and ODP is still strong internationally.
Whilst it would have perhaps been encouraging to see ODP
take a position in Germany and leverage VKNG's
dominance there, SPLS and ODP still do not compete at a
retail level in any of these 3 markets (Germany, Holland
It's a big (bad) world and if
ODP continues to steer clear of SPLS (on a pure
retail level) internationally, the short term effect to
ODP is negligible. The way I see it at the moment,
SPLS has established a great base in Europe... but
their UK experiences have been costly and Germany has
been challenging. It's worth remembering that over
there the retail landscape is very different to the
USA, and even more different to Germany. I would be
interested to see what the analysts (DLJ excepted) make of
the news given that office superstores + Europe
haven't yet equalled profit. And also given that these
stores have been sold once already in the last year (by
Metro to a Deutsche Bank led group of investors). Hot
potato or good business by the Germans?
however, one must question how long ODP can ignore
Europe's 2 largest office supplies markets (Germany and
UK) from a retail perspective. If I were Mr Fuente, I
would be going all out to acquire a similar
competition-free established international presence. The Coles
Myer owned Officeworks chain in Australia springs to
mind. Market dominant, well-established, similar
culture and language, and another VKNG
But what do I know - almost every stock I own has
Good luck to all - could be a
I work for the business services division of ODP
and I won't get into the why's or how's this stock
will hit 40 within 12 months but if you look at the
past I believe you will be able to figure it out
yourself. Viking had a Gross Profit of 45%, they used
almost half the staff for the same amount of work done
at ODP facilities, they use state of the art
equipment and there management team is all but taking over
all distribution center's everywhere. To get ODP at
14 or 15 is one of those purchases you can't pass up
but will kick yourself when you check in 3 or 4
month's. The last down grades were on a short term basis
only, so gobble up as much as you can......and you
won't regret it.
Last Stockholders meeting revealed $900,000,000
cash on hand.
At that time I thought "Great,we
won't have to increase debt
while opening additional
stores even with the credit raising
ranking by the
I do like that buy back idea.
Maybe.... ODP should buy SPLS?
Yankees would have a hard time taking direction from a
bunch of Southerners anyway.
Tip: If you want to
make some money this year dump ODP and buy MER.
Small towns in rural and suburban areas are ripe
markets for these retailers' expansion plans. Megastores
can underprice small office-supply stores, and the
growth of home offices in rural areas is booming. Some
28% of Staples' stores will be in small towns by the
end of 1998, up from 10% four years ago, while
OfficeMax dropped the minimum population size for its
markets to 50,000 from 200,000.
Vroom also cited
great expansion potential in Europe because of its vast
and expanding number of small businesses. A research
report at Lehman Brothers noted that the Viking deal
significantly lowers the risk Office Depot faced in
international expansion because of the acquired firm's
exceptional infrastructure, management know-how and vendor
The shift to the
All of the companies are also expressing hopes that
the Web will play a big part in expansion.
course, none of these companies have yet won
Internet-style earnings multiples. Quite the contrary. In the
past month, they've all been shredded. A recent
Information Week article reported electronic procurement
continues to win converts; Los Angeles County plans to move
80% of its $627 million in annual purchasing to the
Web directly from suppliers by the middle of 1999,
replacing the county's current paper-based acquisition
system. OfficeMax is aggressively offering more than
20,000 items from its Web site, and Office Depot has
followed suit. According to Daniel Binder, an analyst with
Brown Brothers Harriman, 4,000 new customer accounts
came on board since January -- and by year's end, the
company expects to be conducting 20% of its business
through the Internet.
Of course, none of these
companies have yet won Internet-style earnings multiples.
Quite the contrary. In the past month, they've all been
shredded. Office Depot is down 30% and Staples is down more
than 20%. But of the bunch, Office Depot appears the
cheapest -- trading at a 40% discount to Staples, with a
price-earnings ratio of 20.9 compared to Staples' 50.7. The
company suffers from a negative perception as the target
in last year's failed merger. But according to
Lehman Brothers, the stigma is "rapidly fading." At the
other end of the spectrum, OfficeMax's present
price-to-earnings ratio is low at 14.53.
Any investors who
believe that the current economic expansion will continue
should probably consider taking a highlighter to this
sector. These stores could still get cheaper, but it
might be time to start stocking up on supplies.