Back to top

Image: Bigstock

Should Value Investors Buy Office Depot (ODP) Stock?

Read MoreHide Full Article

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One stock to keep an eye on is Office Depot (ODP - Free Report) . ODP is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 5.54. This compares to its industry's average Forward P/E of 12.64. Over the last 12 months, ODP's Forward P/E has been as high as 9.14 and as low as 3.19, with a median of 5.96.

ODP is also sporting a PEG ratio of 0.50. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ODP's PEG compares to its industry's average PEG of 1.29. Over the last 12 months, ODP's PEG has been as high as 0.58 and as low as 0.29, with a median of 0.46.

Finally, our model also underscores that ODP has a P/CF ratio of 5.32. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 19.03. ODP's P/CF has been as high as 7.69 and as low as 3.14, with a median of 5.02, all within the past year.

Value investors will likely look at more than just these metrics, but the above data helps show that Office Depot is likely undervalued currently. And when considering the strength of its earnings outlook, ODP sticks out at as one of the market's strongest value stocks.

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