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Office Depot, Inc. Message Board

  • wall_st_bling wall_st_bling Mar 28, 2010 11:36 PM Flag

    P/E ratio.....Are you people REALLY as stupid as your posts indicate?

    WOW.....are you people REALLY as IGNORANT as your posts idicate?

    The FORWARD P/E ratio is 41.05

    You calculate a Forward P/E ratio by dividing the stock price (8.21) by the forward earnings per share esttimates (.20) for 2011.

    8.21 / .20 = 41.05

    That P/E ratio is higher than AAPL, GOOG, AMZN, and RIMM.

    That means that this stock (Office Depot) is trading as if it has MORE earnings growth potential than AAPL, GOOG, AMZN, and RIMM.

    I only listed those 4 stocks because they are widely viewed as 4 stocks among the stocks that have the highest potential earnings growth in the coming year.

    ODP also has a higher P/E ratio than IBM, GS, MS, WFC, BLK, CAT, MSFT, INTC, CSCO, ORCL, HPQ, just to mention a few......and higher than just about every company on the S&P 500.

    Just for your information, the historical average P/E for companies in the S&P 14.

    You read that correctly.......P/E of 14 for companies in the S&p 500.

    That makes ODP overvalued by approximately 3 times..........meaning that even being generous, ODP is worth somewhere between $3 and $4.00.

    Even if ODP increased their Earnings Per Share (EPS) by 100%.....meaning that business BOOMS and the analysts estimates are off by that much, that would STILL put the P/E ratio at 20.52.......which is STILL higher than AAPL, GOOG, RIMM and AMZN.

    There is NO WAY.....and I mean NO WAY that this company is going to DOUBLE its earnings in one year, and STILL NO WAY that even if it did, that it would be worth more than AAPL, GOOG, AMZN, and RIMM on an earnings growth potential basis.

    Summary....anyone buying this stock is a FOOL, and needs to get an education.

    Ultimately, stocks come back to a fair valuation based on fundamentals.

    Longs will become BAGHOLDERS, and they will learn a very expensive lesson in finance.

    This stock is worth no more than $4.00 tops.

    End of story.

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    • Time will show who is correct.....

      I assume you are the type to "follow a herd off a cliff" -:)

      • 1 Reply to ns1135
      • No,
        I am definately not a "follow the herd" type. I bought ODP at .73/share in March 2009. I was very fortunate. (check my prior posts to verify). I had 4000shares, and am in the process of selling most of it. I'll be down to 1000 shares by July due to a covered call with a strike price of 7. I don't share your view that ODP is grossly overvalued. However, I think its fairly valued at these levels, and probably does not have as much upside potential as some other opportunities.

    • Your arguments are not valid.

      The reason that ODP could have higher growth in EPS than all the companies you listed is because in 2011, ODP is projected to cross the breakeven point. Whenever a company crosses breakeven, EPS, by definition, will become astronomical, but will drop rapidly as earnings increase. According to, ODP lost .26 in 2009, is projected to lose -.08 in 2010, and will earn .20 in 2011. Now that we're out of the recession, sales will increase, and it is reasonable to expect earnings of .50 or more in 2012, which will justify the PE ratio. In fact, if that happens, watch the stock double from the levels we're at now.

      Your strong-sell sentiment could turn out to be a big money loser for you. You probably should find another stock to short.

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