Staples (NASDAQ: SPLS), whose colleagues include Office Depot (NYSE: ODP) and OfficeMax (NYSE: OMX), is set to report earnings for the fourth quarter on Wednesday, March 11. The famous seller of office supplies has seen its stock go from a 52-week high of $26.57 all the way down to a 52-week low of $13.57.
Actually, that's one of the better ranges I've seen! Goes to show how bad things are out there. Staples saw its shares close at $14.63 on Monday, so a beat on the bottom line could really help things out.
Will management be able to beat? I don't have much confidence that it will, but that doesn't necessarily have to do with Staples per se, it's just that the economy's got me down on so many of these earnings prospects. Analysts are hoping for Staples to do about 42 cents per share in Q4, which would represent a 10% drop in the bottom line.
The company's recent history doesn't indicate to me that there's a good chance of a beat, but going beyond that issue, I'll be watching sales growth, comps, and cash flows, adjusted for the Corporate Express acquisition.
In fact, while sales went up 34% in Q3, they were actually down 3% once you took away the effect of Corporate Express. So, shareholders should listen to management to see how the synergies are proceeding between the two businesses.
I don't expect there will be anything in the report that will make me want to buy stock in Staples at this time, but perhaps I'm being presumptuous. Still, I don't think that comps will be great, I doubt the margin growth will be vigorous, and I'd imagine that the overall gloom of the recession is going to keep most investors away.
Again, though, we'll have to wait and see. Most of all, I'd like to know what management's outlook is in a general sense. It won't be upbeat, but Staples seems to be highly focused on the customer, and I want to know what execs at the office superstore think about consumer spending. (Too bad the company doesn't sell an "easy" button to get us out of this recession!)
Disclosure: I don't own any company mentioned; positions can change without notice.
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Reader Comments (Page 1 of 1)
3-10-2009 @ 6:54PM
ryan said...
I dont think my last comment went through, but I would definitley not buy Staples right now. There is a difference between it being a deal and being inexpensive because it just has no value. Sentiment is bearish (http://www.predictwallstreet.com/forecast.aspx?symbol=SPLS) and I don't think you would find too many investors confident in Staples ability right now. In fact, they havent seen much bullishness in the past month at all.