Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, office-supply retailer Office Depot
With that in mind, let's take a closer look at Office Depot's business and see what CAPS investors are saying about the stock right now.
Office Depot facts
| Headquarters (founded) | Boca Raton, Fla. (1986) |
| Market Cap | $1.19 billion |
| Industry | Specialty stores |
| Trailing-12-Month Revenue | $11.5 billion |
| Management | Chairman/CEO Neil Austrian CFO Michael Newman |
| Return on Capital (average, past 3 years) | 0% |
| Cash/Debt | $494.2 million / $748.4 million |
| Competitors |
Costco Staples Wal-Mart |
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 18% of the 617 members who have rated Office Depot believe the stock will underperform the S&P 500 going forward. These bears include All-Stars RedandBlack and BuffettJunior1, both of whom are ranked in the top 15% of our community.
Late last month, RedandBlack touched on Office Depot's seemingly unsustainable valuation: "Big box retailer with no online presence; the trend to paperless offices is still ongoing; trending to negative free cash flow. I don't understand how this company is valued for [its current market cap]."
In fact, Office Depot sports a three-year average net income margin of negative 5.5%. That's obviously lower than consistently profitable rivals like Costco (1.6%), Staples (3.3%), and Wal-Mart (3.6%).
CAPS All-Star BuffettJunior1 elaborates on the Office Depot bear case:
This stock will definitely underperform over the next 5 years. This is a dying company. ... Cash flow has been decreasing significantly over the past 10 years. Debt is slowly increasing. Overall everything is getting worse and worse. Eventually the company will be bought out, or it will have to declare bankruptcy.
What do you think about Office Depot, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!
