Office Depot, Inc. (ODP - Analyst Report), the supplier of a range of office products and services, is slated to report its first-quarter 2014 results on May 6, 2014. In the last quarter, the company formed by the merger of Office Depot and OfficeMax posted a negative surprise of 200%. Let’s see how things are shaping up for this announcement.
Factors this Past Quarter
The soft industry trends weighed upon Office Depot’s fourth-quarter 2013 performance. Demand for office products (paper-based) has been declining due to the latest technological advancements. Smartphones, tablets and laptops are fast emerging as viable substitutes for paper-based office supplies. Moreover, there has been persistent weakness in the office products sector due to decline in business and consumer spending.
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: ESP for Office Depot is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stands at 3 cents.
Zacks Rank #3 (Hold): Office Depot’s Zacks Rank #3 when combined with a 0.00% ESP makes surprise prediction difficult. We caution against stocks with a Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks that Warrant a Look
Here are some other companies you may want to consider as our model shows they have the right combination of elements:
Unit Corporation (UNT - Snapshot Report) has an Earnings ESP of +2.70% and a Zacks Rank #1 (Strong Buy).
Wynn Resorts Ltd. (WYNN - Analyst Report) has an Earnings ESP of +2.87% and a Zacks Rank #2 (Buy).
Time Warner (TWX - Analyst Report) has an Earnings ESP of +1.19% and a Zacks Rank #3 (Hold).