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Office Depot, Inc. Message Board

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  • swampgator1 swampgator1 Aug 4, 1999 1:04 PM Flag

    now we're screwed :-(

    ODP is a great company, BUT there is a limit to
    expansion of the store concept (at least in the U.S.). My
    guess is that can only expand at the current rate for
    another 3 to 4 years. Also, as the store base matures,
    same store sales increases will flatten out as they
    have begun to slightly above the inflation rate. Also,
    the economy is in boom mode.

    Put it all
    together, what have you got? Maybe 15% growth for about
    four years and then question marks. This growth rate
    takes them to an EPS of around $1.75 in 4 years and a
    reasonable multiple at that time might be 15. So four year
    target:
    1.75 x 15 = $26.25. Guess what -- 23.50 /
    (1.10^4) = $17.92.

    Hence, an $18 per share value
    looks pretty reasonable for this stock if a fair return
    is 10% per year. Current stock price is $16.50 or
    so. If you want a little "margin of safety" and don't
    like buying into negative price momentum, you might
    sit back and buy in if the stock sinks below $15. If
    I held the stock, however, I would hold on.


    One man's opinion! Good luck all.

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