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Why Office Depot Stock Popped Today

By Steve Symington – Updated Apr 16, 2019 at 10:00AM

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The office supply retailer delivered solid quarterly results and reiterated its 2019 guidance. Here's what investors need to know.

Shares of Office Depot (ODP 0.54%) were up 11% as of 3:45 p.m. EST Wednesday after the company announced strong fourth-quarter 2018 results. 

More specifically, Office Depot's quarterly net sales climbed 3.4% year over year to $2.67 billion, translating to adjusted net income from continuing operations of $52 million, or $0.09 per share, up from $45 million, or $0.09 per share in the same year-ago period. Analysts, on average, were expecting lower earnings of $0.08 per share on slightly higher revenue of $2.68 billion. 

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So what

Within Office Depot's top line, product sales fell 1% to $2.25 billion, while services revenue climbed 34% thanks to a combination of growth from the company's business services division and the partial inclusion of CompuCom divisional results in the segment. Excluding CompuCom, service revenue climbed 19%.

"In the pivotal year of our transformation, we achieved our key priorities of recapturing top-line growth, expanding our distribution platform, growing our services business, generating significant free cash flow, and strengthening our balance sheet," stated Office Depot CEO Gerry Smith.

Check out the latest Office Depot earnings call transcript.

Now what

For the full fiscal-year 2019, Office Depot reaffirmed its previous outlook for revenue to arrive at $11.1 billion (up from $11.0 billion in fiscal 2018) with adjusted EBITDA of $575 million (up from $567 million in fiscal 2018).

In the end, coupling that progress with Office Depot's modest bottom-line beat gave investors more than enough reason to optimistic for its future, and the stock is responding in kind.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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