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
In post #2052 on 8/6/99, I thought $10 was the
rock bottom price, but now I am not sure. OMX is
trading at 7 11/16 with current earnings expectations of
.93 this year and 1.08 next year. The new
expectations for ODP are around .85 and 1.00.
now a tainted stock too. It will take a while to get
the stigma off the stock. ODP failed to deliver with
their new inventory system. It seems as though they In
retail if you don't have what customers want they go
next door to WMT, SPLS, or Target. It sounds like
their new stores must have been ill conceived because
sells are very weak in the new stores. My understanding
is that they lost some good people in the real
estate area during the merger attempt. That would be a
very good explanation for the failure of the new
stores. Once again in retail you must put the store close
to the high traffic areas. Bubba isn't going to
drive 2 miles out of his way to save .25 on a stapler.
He will just buy it at ABS when he gets his beer if
the office products store isn't close
Some people are trying to compare ODP to CPU, but
there are some big differences. Neither CPU or ODP will
make money on PC's, but ODP does sell a lot of high
margin items that CPU doesn't.
I am adjusting my
low-end target to around $8 a share. ODP's problems are
not quite as bad as OMX. ODP will probably not trade
above $12 until it proves it can execute. Institutions
will wait until the first or second quarter of next
year to see if ODP is getting back on track. Until
then I see a $8 to $12 stock.
I am fairly new here, but have been a Staples
shareholder for 4-5 years. I began buying into ODP a few
months ago and am a long term investor.
been busy and mostly offline for the past 10 days and
am now catching up on the past couple of weeks'
postings. I just now read the info you posted [#2093-2095]
and wanted to thank you. It was very informative and
enjoyable and is really not that old. My first purchase was
100 at $19 and I took advantage of the recent price
drop to buy 100 at $15 7/8; not a lot,but now I have
200 shares to keep for many years!
[retirementsavings!]Thanks again. -tofu-
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.
Company is heading in the $10 - $12 range. As a
group, ODP, SPLS, CEXP, OFIS, BOP are ALL sucking wind!
I am looking for more consolidation in the office
products industry very shortly. The interesting company is
BOP. How are they going to compete with a 9B BT/CEXP?
Things are getting interesting!
white candle on the dow? yes....on ODP?
here's a neat article that tells about
and as you'll see, they are Japanese candles (where
I've been calling them Chinese)....shows how much I
know!.....(apologies to any Chinese or Japanese readers...no offense
you can follow the candlestick charts at
TA on ODP can be summed up in one
word: "stillbad"....(ok, I cheated, but it's better
than droning on and on about moving indicators and
General market is a different
story......(I have to go on and on a little).....
dow did have a little bounce today.....and the 20 day
didn't cross the 50 day moving average....yet.....but
the 18 day has, and the 19 day is touching the
50......will friday 13 be the lucky day????.......also, it
looks like if the dow closes below 10,650 (aprox)the
next support is not until around 10,000.....(actually,
I think my program identified something like 10,649
& change as support, but no need to split
the 20 day DID touch the 50 day on the S&P 500
and the transports still look aweful......
to mention all the anal-ists touting how many
bargains are out there today......
I think I'll put
my checkbook away for another few
hoping, again, that I'm wrong.....
best of luck to