The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Office Depot met expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue was unchanged and GAAP earnings per share increased. The non-GAAP profit was a surprise, as analysts had predicted a loss.
Gross margins improved, operating margins dropped, and net margins expanded.
Office Depot booked revenue of $2.97 billion. The 14 analysts polled by S&P Capital IQ expected a top line of $3.00 billion on the same basis. GAAP reported sales were 0.3% higher than the prior-year quarter's $2.96 billion.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
Non-GAAP EPS came in at $0.03. The 18 earnings estimates compiled by S&P Capital IQ predicted -$0.01 per share on the same basis. GAAP EPS were $0.04 for Q4 versus -$0.39 per share for the prior-year quarter.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 30.3%, 170 basis points better than the prior-year quarter. Operating margin was 0.4%, 10 basis points worse than the prior-year quarter. Net margin was 0.7%, 410 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $2.95 billion. On the bottom line, the average EPS estimate is $0.03.
Next year's average estimate for revenue is $11.46 billion. The average EPS estimate is $0.09.
The stock has a one-star rating (out of five) at Motley Fool CAPS, with 487 members out of 626 rating the stock outperform, and 139 members rating it underperform. Among 186 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 145 give Office Depot a green thumbs-up, and 41 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Office Depot is hold, with an average price target of $3.38.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.