Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Tuesday was a bad day for the stock market but a very good day for one stock that trades on it: Office Depot
So what: It wasn't exactly the result you would expect. OD announced this morning that its adjusted loss widened to $0.06 per share in the second quarter (the net loss was $0.11), while sales flatlined. That was more than enough for Wall Street, though, which had been girding itself for news of a $0.12-per-share loss.
Now what: But this is more than just an "exceeded expectations" story. According to new OD CEO Neil Austrian, change is afoot.No longer content to sell lots of stuff without a lot of profit, Austrian told investors that his goal is "1,000% concerned on gross profit dollars."
That sounds neither grammatically correct nor mathematically plausible to me. Still, it sounds like his intentions are in the right place. I can't in good conscience advise anyone to go out and buy a stock that costs 23 times next year's earnings, of course -- not when it's expected to grow at only 11% per year over the next five years. On the other hand, Office Depot may at least be worth watching. Who knows? Maybe with a new CEO in the corner office, actions will begin to match words.
Can Austrian pull it off? Add Office Depot to your Watchlist and find out.
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