Office Depot, Inc. (ODP), the supplier of a range of office products and services, is slated to report its second-quarter 2014 results on Aug 5. In the last quarter, it posted a positive surprise of 133.3%. Let’s see how things are shaping up for this announcement.
Factors Influencing This Quarter
The office supplies industry is grappling with secular as well as cyclical headwinds. Demand for office products has been curbed by the latest technological advancements. Smartphones, tablets and laptops are fast emerging as viable substitutes to paper-based office supplies. Big-ticket items are facing a declining demand. However, Office Depot is taking a rational approach by focusing on cost containment, closing underperforming stores, introducing smaller format stores, bringing more products under their ambit and taking e-Commerce initiatives.
Our proven model does not conclusively show that Office Depot is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below.
Zacks ESP: Earnings ESP for Office Depot is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 2 cents.
Zacks Rank: Office Depot carries a Zacks Rank #3 (Hold). Though a favorable Zacks Rank increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
Stocks That Warrant a Look
Here are some companies you may want to consider as our model shows that these have the right combination of elements:
Archer Daniels Midland Company (ADM) has an Earnings ESP of +2.67% and a Zacks Rank #3.
Exponent Inc. (EXPO) has an Earnings ESP of +1.43% and a Zacks Rank #3.
Time Warner Inc. (TWX) has an Earnings ESP of +1.19% and a Zacks Rank #3.