Q4 Preview: Not Much Expected for Office Depot (ODP) as Investors Focus on Comps, Closures

Shares of Office Depot (NYSE: ODP) are about 2 percent higher Monday heading into the company's fourth-quarter earnings report, expected out before the market opens Tuesday.

The Street is currently expecting Office Depot to report break even earnings, down from profit of 9 cents per share in the same period last year. Revenue should see a slight pop higher to $3 billion. Over the last several quarters, Office Depot has bested views by an average of 110 percent.

Shares of Office Depot have moved 19 percent better through the quarter and are up 40 percent since after dropping 60 percent through 2011.

Investors might take a look at Office Max (NYSE: OMX) into numbers for Office Depot. The rival office supply giant reported a beat on the top- and bottom-lines with EPS of 17 cents and revs of $1.84 billion in the most recent quarter.

The Street remains rather neutral on Office Depot into results with Bloomberg data showing three analysts having a Buy on the stock, 15 at Hold, and one with a Sell. The analyst price target average is $4 with a range of $2.50 to $6 per share. Office Depot has moved from $1.75 to $5.54 over the last year and the analyst price target average suggests about 33 percent of upside.

Analyst Comments

• Goldman Sachs sees EPS of 1 cent for the quarter. The firm noted subdued expectations for Office Depot heading into the print following a choppy stretch. "ODP's decision to tender for bonds and as such likely refinance existing indebtedness suggested to us that visibility for the print and guidance is reasonable - we would note that despite a tough secular outlook for office products retail, the near-term stock outlooks for ODP/OMX, the smaller players, rests more with their own operating and cost control initiatives than with macro trends."
  
  
• Deutsche Bank sees a loss of 1 cent per share with sales increasing 4 percent (down 1 percent minus one extra selling week) and comps down 2 percent. Deutsche said the consensus views call for revs to increase 0.8 percent and revs to drop just 1.7 percent.
  
  Keys in the quarter include any indications of comp stabilization, amount of store closures, line space consolidation, and an update for its long-term expense savings plans.
  
  Deutsche commented, "The impact of the California economy is the main company-specific risk at the moment, given its leverage to that state relative to competitors OfficeMax and Staples (Nasdaq: SPLS). Internationally, while top-line trends have stabilized in the UK, the impact of the local economy in that geography presents a risk as well. Other business risks include consumer and business spending, which can be impacted by issues outside the company's control, including employment trends."

Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of their release. You can also check out Office Depot's past performance at Streetinsider's Office Depot's Income Statement.

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