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Why Staples, Inc. Stock Popped (Again) Today

The office supplies retailer continued climbing after talks of a potential acquisition. Here's what investors need to know.

By Steve Symington – Updated Apr 5, 2017 at 4:27PM EST

What happened

Shares of Staples Inc. (SPLS +0.00%) climbed as much as 5.8% on Wednesday, and traded up 3.4% as of 3:30 p.m. EST as investors speculated that the stock is still undervalued following reports on Tuesday that the company is considering selling itself.

So what

Today's jump follows a nearly 10% pop yesterday, which was driven by a Wall Street Journal report stating Staples is holding early acquisition talks "with a small number of possible private-equity bidders." As Barron's Andrew Bary argues, however, Staples stock could still be worth buying given its "low valuation, potential catalysts, and near 5% dividend yield."
 
The Staples logo.

Image source: Staples.

Now what

In addition to the healthy dividend, Staples stock is still down 10% over the past year and currently trades at just 11 times this year's expected earnings. And when the company released in-line Q4 2016 results a few weeks ago, CEO Shira Goodman insisted, "I'm increasingly confident that we have the right plan and the right team to transform Staples and get back to sustainable sales and earnings growth."

That could be exactly why Staples' potential suitors are trying to opportunistically purchase the company in the first place. But if any acquisition premium that's offered fails to appease shareholders, it seems safe to expect the market will cry foul.

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About the Author

Steve Symington
A graduate of the University of Montana, Steve worked for seven years in the defense & aerospace industry as a software and sales engineer. But his love for responsible long-term investing and delving into 10-Ks ultimately led him to The Motley Fool, where he's written more than 8,000 syndicated articles on investing, the stock market, business, strategy and finanial analysis. Enjoy his work? Connect with him on Twitter and Facebook so you don't miss a thing.
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Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

Staples Stock Quote
Staples
NASDAQ: SPLS
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*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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