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OfficeMax, Inc. (OMX)

Zacks Equity Research

Amid a sluggish recovery in the economy, OfficeMax, Inc. (OMX) posted better-than-expected second-quarter 2012 results. The quarterly earnings of $0.12 per share beat the Zacks Consensus Estimate by $0.05 and rose substantially from $0.07 earned in the prior-year quarter, on the back of effective cost management.

OfficeMax now projects sales to remain flat or marginally higher for the third quarter, and to be flat for fiscal 2012 compared with the prior year. OfficeMax is repositioning itself to keep afloat in a difficult consumer environment. The company is containing costs, closing underperforming stores and focusing on providing innovative products and services, which should all contribute to margin improvements.

Management expects operating margin to come in line for the third quarter, and to be even with or marginally higher for fiscal 2012. The company also reinitiated its dividend payout after suspending it three and a half years ago. Consequently, we adopt a bullish stance on the stock.

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