Shares of Office Depot, Inc. (ODP - Free Report) took a dive, following management’s cautionary statement on lower-than-expected operating performance at the CompuCom division. It also added that the segment’s muted performance will have a direct bearing on total revenues and operating income during the first quarter of 2019. These were enough to send the stock down more than 23% on Apr 5.
The provider of business services and supplies, products, and technology solutions now envisions first-quarter revenue to be approximately $2.76 billion, down more than 2% from the year-ago period. The figure is also below the current Zacks Consensus Estimate of $2.83 billion. Office Depot also forecast adjusted operating income of approximately $65 million, including an operating loss of about $15 million for CompuCom division and down from $93 million reported in the year-ago quarter.
With the acquisition of CompuCom in 2017, this Boca Raton-based company took initiatives to transition from a traditional office products retailer to a business services and technology company. However, weaker-than-anticipated revenues from existing customer projects and less-than-proportionate fall in related expenses compelled management to project an operating loss for the division in the first quarter of 2019. The division generated operating income of $5 million in the first quarter of 2018.
Nevertheless, the company hopes that strategic endeavors such as streamlining operational structure, exploring options to speed-up cross-selling opportunities and reorganizing customer-facing organization would help bring the segment back on track.
Office Depot also guided first-quarter operating income from Business Solutions Division to be approximately $46 million, down from $55 million in the year-ago period. Management informed that increase in paper and paper related costs, lower eCommerce sales and other investments were a drag on the operating income.
The company now anticipates Retail division’s operating income to be about $66 million in the first quarter of 2019, down from $72 million reported in the year-ago period. Nonetheless, management is focusing on improving conversion, product assortment mix and exploring store-within-a-store opportunities to improve the segment’s performance.
Definitely, the company is trying all means to give itself a complete makeover in an environment where demand for office products (paper-based) has shrunk due to technological advancements. The company is focusing on business operating model, viable projects and cost structure. Management is making incremental investments to catapult it into a product and services-driven enterprise.
We note that shares of this Zacks Rank #3 (Hold) company have increased 3.6% in the past three months compared with the industry growth of 17.4%.
3 Stocks to Watch
Abercrombie & Fitch (ANF - Free Report) delivered average positive earnings surprise of 88.3% in the trailing four quarters. It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Costco (COST - Free Report) delivered average positive earnings surprise of 5.5% in the trailing four quarters.
Amazon.com (AMZN - Free Report) has a long-term earnings growth rate of 31.2% and a Zacks Rank #2.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Shares of Office Depot, Inc. (ODP - Free Report) took a dive, following management’s cautionary statement on lower-than-expected operating performance at the CompuCom division. It also added that the segment’s muted performance will have a direct bearing on total revenues and operating income during the first quarter of 2019. These were enough to send the stock down more than 23% on Apr 5.
The provider of business services and supplies, products, and technology solutions now envisions first-quarter revenue to be approximately $2.76 billion, down more than 2% from the year-ago period. The figure is also below the current Zacks Consensus Estimate of $2.83 billion. Office Depot also forecast adjusted operating income of approximately $65 million, including an operating loss of about $15 million for CompuCom division and down from $93 million reported in the year-ago quarter.
With the acquisition of CompuCom in 2017, this Boca Raton-based company took initiatives to transition from a traditional office products retailer to a business services and technology company. However, weaker-than-anticipated revenues from existing customer projects and less-than-proportionate fall in related expenses compelled management to project an operating loss for the division in the first quarter of 2019. The division generated operating income of $5 million in the first quarter of 2018.
Nevertheless, the company hopes that strategic endeavors such as streamlining operational structure, exploring options to speed-up cross-selling opportunities and reorganizing customer-facing organization would help bring the segment back on track.
Office Depot also guided first-quarter operating income from Business Solutions Division to be approximately $46 million, down from $55 million in the year-ago period. Management informed that increase in paper and paper related costs, lower eCommerce sales and other investments were a drag on the operating income.
The company now anticipates Retail division’s operating income to be about $66 million in the first quarter of 2019, down from $72 million reported in the year-ago period. Nonetheless, management is focusing on improving conversion, product assortment mix and exploring store-within-a-store opportunities to improve the segment’s performance.
Definitely, the company is trying all means to give itself a complete makeover in an environment where demand for office products (paper-based) has shrunk due to technological advancements. The company is focusing on business operating model, viable projects and cost structure. Management is making incremental investments to catapult it into a product and services-driven enterprise.
We note that shares of this Zacks Rank #3 (Hold) company have increased 3.6% in the past three months compared with the industry growth of 17.4%.
3 Stocks to Watch
Abercrombie & Fitch (ANF - Free Report) delivered average positive earnings surprise of 88.3% in the trailing four quarters. It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Costco (COST - Free Report) delivered average positive earnings surprise of 5.5% in the trailing four quarters.
Amazon.com (AMZN - Free Report) has a long-term earnings growth rate of 31.2% and a Zacks Rank #2.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
See Latest Stocks Today >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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