Office Depot (ODP) Tops Q3 Earnings Estimates, Stock Up 16%
Zacks Investment Research | Nov 06, 2019 10:34PM ET
Office Depot, Inc.’s (NASDAQ:ODP) third-quarter 2019 results marked the sixth straight quarter of positive earnings surprise. Notably, the bottom line also improved from the year-ago period. Lower interest expense coupled with fewer outstanding shares aided year-over-year growth. However, the company’s top line not only missed the Zacks Consensus Estimate but also fell year over year. We note that sales declined across all three divisions of the company.
Impressively, profit margins grew in all the divisions, owing to gains from Business Acceleration Program (“BAP”). As a result, management continues to anticipate generating cost savings of at least $40 million in 2019 and more than $100 million in annual run-rate cost savings thereafter. Further, the company kept its view for 2019 intact.
Concurrent to the earnings release, Office Depot announced that its board approved a review of the implementation of a holding company reorganization. This is likely to be concluded by first-quarter 2020. If this is implemented, the reorganization is expected to create a new holding company, The ODP Corporation. This will then become the new parent company of Office Depot, replacing the latter’s current ticker symbol “ODP” trading on Nasdaq.
We note that shares of the business services and supply provider improved nearly 15.5% yesterday. The Zacks Rank #2 (Buy) stock has gained roughly 52.8% in the past three months against the Zacks Investment Research
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