A Look at Office Depot Without the Merger

February 19, 2013

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E = Equity to Debt Ratio Is Normal

The debt-to-equity ratio for Office Depot is normal. The balance sheet is in fine condition. Cash flow is solid. Office Depot has operating cash flow of 263.97 million, and levered free cash flow of $297.34 million.

	Debt-To-Equity	Cash	Long-Term Debt
ODP	0.63	$619.53 Million	$671.11 Million
OMX	0.90	$506.02 Million	$971.39 Million
SPLS	0.27	$1.02 Billion	$1.66 Billion

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T = Technicals on the Stock Chart Are Mixed

The past three years have been unkind to Office Depot. However, you could say the same for its competitors. The past year has been incredibly strong for Office Depot in regards to stock performance, but keep in mind that it came from a very low point of $1.51. As far as yield goes, it doesn’t exist for Office Depot, but it does exist for OfficeMax and Staples, which offer yields of 0.70 percent and 3.40 percent, respectively.

	1 Month	Year-To-Date	1 Year	3 Year
ODP	11.40%	57.93%	58.90%	-21.16%
OMX	18.96%	34.93%	130.50%	-11.11%
SPLS	12.15%	27.89%	-0.44%	-38.73%

At $5.16, Office Depot is currently trading above all its averages.

50-Day SMA	3.85
100-Day SMA	3.25
200-Day SMA	2.64

E = Earnings Have Been Inconsistent

Earnings haven’t been impressive over the past few years, but at least they have been heading in the right direction. Revenue, on the other hand, has been heading in the wrong direction. This is a rare combination.

	2007	2008	2009	2010	2011
Revenue ($)in billions	15.53	14.50	12.14	11.63	11.49
Diluted EPS ($)	1.43	-5.42	-2.00	-0.23	0.17

When we look at the last quarter on a year-over-year basis, we see a decline in revenue and earnings.

	9/2011	12/2011	3/2012	6/2012	9/2012
Revenue ($)in billions	2.84	2.97	2.87	2.51	2.69
Diluted EPS ($)	0.28	0.02	0.14	-0.18	-0.19

Let’s take a look at the next page for the Trends and Conclusion. Is this stock an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY?

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