Office Depot Inc. ( ODP - Analyst Report ) – one of the leading suppliers of office products and services across the globe – is expected to report its third quarter 2012 financial results on Tuesday, October 30, 2012.

The current Zacks Consensus Estimate for the quarter stands at 1 cent per share, which is above the break-even earnings reported in the comparable prior-year period. Revenue, as per the Zacks Consensus Estimate, is pegged at $2,731 million.

Last Quarter Recap

Office Depot posted second-quarter 2012 results with a loss of 14 cents a share that sharply widened from a loss of 6 cents delivered in the year-ago quarter, and also fared worse than the Zacks Consensus Estimate of a loss of 9 cents. The dismal results were due to weak top-line performance on account of soft sales in North America and Europe.

The company’s total revenue of $2,507.2 million decreased 7% from the prior-year quarter and also fell short of the Zacks Consensus Estimate of $2,584 million. In constant currency, revenue slipped 5%.

Agreement of Estimate Revision

For the to-be-reported quarter, the estimates remain unchanged with no estimate going up or down (out of 14) over the last 30 days or 7 days. Furthermore, the story remains the same for fiscal 2012. The estimates were kept intact mainly due to lack of news or event, which could have a direct or indirect impact on these.

Magnitude of Estimate Revision

For the third quarter 2012, the estimate remains stagnant at 1 cent per share over the last 7 or 30 days, mainly due to the absence of estimate revision, whereas for 2012, the estimate remained unchanged at a loss of 3 cents over the last 7 or 30 days.

Mixed Earnings Surprise History

With respect to earnings surprise, Office Depot has missed the Zacks Consensus Estimate in two quarters over the last four quarters, whereas the estimates met and surpassed in one quarter each. The average remained at a negative of 77.8%.

Conclusion

Office Depot is containing costs, closing underperforming stores, managing inventory and focusing on providing innovative products and services, which should all contribute to margin improvement. In order to increase store sales productivity, the company is concentrating on remodeling and introducing smaller format stores. However, we still remain cautious about the macroeconomic environment, with small businesses and consumers still remaining watchful on their spending.

As a result, we maintain our long term ‘Neutral’ recommendation on the stock. However, Office Depot, which competes with Staples Inc. ( SPLS - Analyst Report ) and OfficeMax Inc. ( OMX - Analyst Report ) , carries a Zacks #5 Rank, implying a short-term ‘Strong Sell’ rating on the stock for the coming 1-3 months, and reflects negative average earnings surprise.