Please ensure Javascript is enabled for purposes of website accessibility

Why Office Depot Inc. Stock Popped Tuesday

By Daniel Sparks - Aug 7, 2018 at 12:07PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A solid quarter has encouraged Office Depot management.

What happened

Shares of office supplies retailer Office Depot (ODP -0.64%) jumped as much as 15.1% on Tuesday, following the company's second-quarter earnings release. Shares are up 12.7% as of 11:37 a.m. EDT.

The company's better-than-expected second-quarter results were likely the primary reason for the stock's surge on Tuesday. Both sales and earnings per share came in above consensus analyst estimates for the period.

A chart showing a stock price rising

Image source: Getty Images.

So what

Office Depot reported second-quarter sales of $2.63 billion, up 11% from $2.36 billion in the year-ago quarter. On average, analysts expected revenue of $2.58 billion, or 9% sales growth. 

Non-GAAP earnings per share for the period came in at $0.05, down from $0.06 in the year-ago quarter. On average, analysts expected non-GAAP EPS of $0.04.

Office Depot CEO Gerry Smith said he was "extremely pleased" with the company's quarterly performance, pointing to Office Depot's improving sales trends across each of its operating divisions.

Highlighting management's confidence, the company reinitiated its share-repurchase program and bought back $8 million worth of shares during the quarter.

Now what

Importantly, Smith believes the company's execution on its strategy positions it to grow over the long haul. "I am encouraged by the momentum we are seeing across all of our businesses and the success we are realizing in generating working capital improvements," Smith said.

With a strong quarter behind it, management maintained its outlook for full-year sales of $10.8 billion, which would mark 5% growth over 2017 sales. In addition, Office Depot expects full-year adjusted operating income of $360 million and free cash flow of $350 million.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The ODP Corporation Stock Quote
The ODP Corporation
ODP
$38.81 (-0.64%) $0.25

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
356%
 
S&P 500 Returns
124%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.