Is It Time to Give Up On Staples?

E = Equity to Debt Ratio Is Strong

The debt-to-equity ratio for Staples is excellent. It’s also much stronger than the debt-to-equity ratios for Office Depot (NYSE:ODP) and OfficeMax International (NYSE:OMX). The balance sheet might not be positive at the moment, but it’s in very manageable shape.

Debt-To-Equity

Cash

Long-Term Debt

SPLS

.27

$1.02 Billion

$1.66 Billion

ODP

.99

$619.53 Million

$486.04 Million

OMX

1.28

$506.02 Million

$1.34 Billion

 

T = Technicals on the Stock Chart Are Weak

Staples, Office Depot, and OfficeMax International have all performed poorly on a three-year basis, but Staples is the only one that hasn’t bounced back within the past year. This is a bad sign. It shows that management is being outmaneuvered.

1 Month

Year-To-Date

1 Year

3 Year

SPLS

.12%

-9.84%

-8.58%

-46.69%

ODP

18.67%

65.58%

71.98%

-45.90%

OMX

5.64%

119.90%

134.90%

-23.20%

 

At $12.11, Staples is currently trading above its 50-day and 100-day SMA, but below its 200-day SMA.         

50-Day SMA

11.56

100-Day SMA

11.72

200-Day SMA

13.03

 

E = Earnings and Revenue Have Been Inconsistent

Revenue has increased since 2009, but at a very slow pace. What’s interesting here is that out of the three aforementioned companies, Staples is the only one to show a profit every year over the past five years. It’s also the only company to show increased revenue since 2009.

2008

2009

2010

2011

2012

Revenue ($)in billions

19.37

23.08

24.28

24.55

25.02

Diluted EPS ($)

1.38

1.13

1.02

1.21

1.40

 

Looking at the last quarter on a YoY basis, we see a decrease in revenue and earnings. This has spooked investors.

10/2011

1/2012

4/2012

9/2012

10/2012

Revenue ($)in billions

6.48

6.55

6.12

5.50

6.35

Diluted EPS ($)

.47

.40

.27

.18

-.89