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Here's How Office Depot (ODP) is Poised Ahead of Q4 Earnings

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Office Depot, Inc. ODP is slated to release fourth-quarter 2019 results on Feb 26. This provider of business services and supplies, products and technology solutions has a trailing four-quarter positive earnings surprise of 19.1%, on average. In the last reported quarter, the company reported positive earnings surprise of 7.1%.

The Zacks Consensus Estimate for fourth-quarter earnings is currently pegged at 9 cents, flat with the year-ago quarter. We note that the Zacks Consensus Estimate has remained stable in the past 30 days. The Zacks Consensus Estimate for revenues is pegged at $2,580 million, suggesting a decline of about 3.4% from the prior-year comparable period.

Key Factors to Note

Office Depot has been focusing on business operating model, viable projects and cost structure, and making incremental investments to increase the revenue contribution from services. It has been concentrating on enhancing e-commerce platforms, increasing penetration into adjacent categories and providing innovative products. Adjacency categories account for more than 30% of overall Business Solutions Division sales.

However, softness across CompuCom and Retail divisions has been a concern. We note that the company’s Retail division has been witnessing dismal comparable-store sales for a while now. Persistence of such performance across both these divisions is likely to get reflected in the company’s fourth-quarter results.

Nonetheless, the company’s bottom line is likely to have benefited from Business Acceleration Program that involves reducing costs, improving operational efficiencies, enhancing service delivery, effective use of technology and automation and identifying strategic investment opportunities.

Office Depot, Inc. Price, Consensus and EPS Surprise

Office Depot, Inc. Price, Consensus and EPS Surprise

Office Depot, Inc. price-consensus-eps-surprise-chart | Office Depot, Inc. Quote

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Office Depot this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Although Office Depot carries a Zacks Rank #3, it has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With Favorable Combination

Here are companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Costco COST has an Earnings ESP of +0.20% and a Zacks Rank of #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Target TGT has an Earnings ESP of +0.78% and a Zacks Rank #3.

Casey's General Stores CASY has an Earnings ESP of +3.45% and a Zacks Rank #3.

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