Office Depot (ODP) Beats On Q3 Earnings & Sales, Updates View
Zacks Investment Research | Nov 07, 2018 09:33PM ET
Office Depot, Inc. (NASDAQ:ODP) delivered second straight quarter of positive earnings and sales surprises, when it reported third-quarter 2018 results. However, in spite of higher sales, earnings declined year over year. This can be attributed to rise in cost of goods sold, occupancy costs, and increased SG&A and interest expenses. Moreover, the prior-year period was also favorably impacted by the tax benefit.
Nevertheless, analysts believe that decent results and strategic initiatives, including strengthening of core businesses. and expansion of service and subscription offerings, might have prompted management to raise 2018 sales view.
Experts believe that improvement in Business Solutions and CompuCom divisions is likely to benefit the company going forward. It has undertaken a strategic review of business operating model, growth prospects and cost structure. The company is also concentrating on e-commerce platforms. Management is also making incremental investments to catapult it into a product and services-driven enterprise. Service revenue now represents approximately 15% of total sales.
Following the results, shares of this Zacks Rank #3 (Hold) company have surged roughly 24% during the trading session on Nov 7. We note that the stock has gained 13% compared with the Original post
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