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Why Staples, Inc. Stock Popped (Again) Today

By Steve Symington - Apr 5, 2017 at 4:27PM

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

What happened

Shares of Staples Inc. (SPLS) 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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