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Is Office Depot (ODP) a Great Value Stock Right Now?

Zacks Equity Research

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company to watch right now is Office Depot (ODP). ODP is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 5.87, which compares to its industry's average of 13.12. ODP's Forward P/E has been as high as 9.14 and as low as 3.19, with a median of 5.70, all within the past year.

Investors will also notice that ODP has a PEG ratio of 0.53. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ODP's industry currently sports an average PEG of 1.28. Over the past 52 weeks, ODP's PEG has been as high as 0.58 and as low as 0.29, with a median of 0.46.

Finally, our model also underscores that ODP has a P/CF ratio of 5.70. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 19.80. Over the past 52 weeks, ODP's P/CF has been as high as 7.69 and as low as 3.14, with a median of 5.

These are just a handful of the figures considered in Office Depot's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that ODP is an impressive value stock right now.


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