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Is Office Depot (ODP) a Great Value Stock Right Now?

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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

Office Depot (ODP - Free Report) is a stock many investors are watching right now. ODP is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 7.73, which compares to its industry's average of 13.84. Over the past 52 weeks, ODP's Forward P/E has been as high as 9.47 and as low as 4.42, with a median of 7.51.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. ODP has a P/S ratio of 0.15. This compares to its industry's average P/S of 0.41.

Finally, our model also underscores that ODP has a P/CF ratio of 6.62. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 20.02. ODP's P/CF has been as high as 7.21 and as low as 3.09, with a median of 5.54, all within the past year.

These are only a few of the key metrics included in Office Depot's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, ODP looks like an impressive value stock at the moment.


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