To really understand a stock, you just have to get down and dirty, break out your pencil, and really weigh the risk versus reward potential of the company you're following. I propose we take a closer look at the good and the bad at OfficeMax (NYSE: OMX) to see if the stock is a good value or a potential money pit.

The good
OfficeMax recently piqued my interest when I noticed how much of an incredible run it has had off its 2009 lows. OfficeMax is a company that economists often look to for help in determining the health of small businesses. Apparently things are looking bright for small business, because the office supply chain had a rocking quarter.

Behind OfficeMax's stellar results is a cost-cutting initiative that involves closing underperforming stores and focusing advertising on customer retention. OfficeMax rejuvenated its gross margins back to 22.8% and nearly doubled analyst profit projections. OfficeMax is paying less to retain customers, which is always a plus, and it appears to be gaining some market share from rivals Office Depot (NYSE: ODP) and Staples (Nasdaq: SPLS).

The bad
OfficeMax's own strategy of cost-cutting can only carry the company's gross margins so far. As the company continues to close underperforming locations, it also contracts its revenue stream. It may have blown past earnings expectations in the latest quarter, but it fell well short of revenue projections.

From a balance sheet perspective, OfficeMax also falls short of its rivals. Office Depot is cheaper based on its price-to-book value. Also, Office Depot is the subject of takeover rumors after recently replacing its management team, and despite this run-up, still appears to be the cheaper play.

Staples just runs circles around OfficeMax from a growth perspective, albeit we're not talking about anything more than mid-single-digit growth in this specialty retail space. Staples has the better return on equity, lower price-to-book, better cash flow, higher profit margin, and lower forward price-to-earnings. Game-set-match: Staples.

The takeaway
I have to give credit where credit is due, because I figured OfficeMax to be a goner during the market meltdown, but it persevered and emerged leaner and profitable. Unfortunately, it hasn't done anything to address future growth. With the prospect of 1% to 2% revenue growth looming, and its price-to-book value already at 2.8 and a forward price to earnings ratio of 16.5, I just can't see much logic behind the bull case. Long-term buy-and-hold bulls have been battered and bruised holding OfficeMax. Right now, it looks like nothing more than an investing paperweight.

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Fool contributor Sean Williams does not own shares in any companies mentioned in this article. He would love to have an investing 'Easy' button. You can follow him on CAPS under the screen name TMFUltraLong. Staples is a Motley Fool Stock Advisor pick. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.