Back to top

Image: Bigstock

ODP Corp. (ODP) Moves 8.8% Higher: Will This Strength Last?

Read MoreHide Full Article

The ODP Corporation (ODP - Free Report) shares soared 8.8% in the last trading session to close at $46.20. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 1.2% loss over the past four weeks.

Shares of The ODP Corporation got a boost from optimism surrounding the company’s latest plans to spin off its B2B businesses as well as better-than-expected earnings reported in the first-quarter of 2021. As a result of the spin off, the company will be split into two independent publicly traded companies. The separation, which is expected to be completed during the first half of 2022, is likely to improve strategic focus and thereby help in the creation of long-tem value for shareholders.

In respect of the recently reported first-quarter earnings, we note that the company’s earnings of $1.21 surpassed the Zacks Consensus Estimate of $1.02 and was flat year over year. Despite the challenges emerging from the pandemic, continued execution of cost efficiency measures acted as an upside in the reported quarter.  Additionally, the company has been gaining from efforts to boost omni-channel offerings.

Price and Consensus

Price Consensus Chart for ODP

This office supply retailer is expected to post quarterly earnings of 86 cents per share in its upcoming report, which represents a year-over-year growth of 1,328.6%. Revenues are expected to be $2.31 billion, up 7.1% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For The ODP Corporation, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on ODP going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

The ODP Corporation (ODP) - free report >>

Published in