Q3 Preview: Light International Numbers Could Pressure Staples (SPLS) Results

Staples (Nasdaq: SPLS) shares are trading lower Monday afternoon heading into its third-quarter earnings report, expected out before the market opens Tuesday. The office supplies giant scheduled a call for 9:00am EST on November 15th. Click here to go to Staples Q3 Webcast page.

The Street is looking for Staples to report earnings of 47 cents per share on revenue of $6.71 billion. If the company can hit such earnings, the results would be a 17.5 percent increase over the same period last year.

Shares of Staples are currently going for about 9.2x next year's earnings estimates, excluding cash.

Data from Bloomberg has 10 analysts with a Buy rating on Staples, 10 at Hold, and zero with a Sell. The Street price target average is $18.40, with a low of $13 and high of $23.

Analyst Comments

• Goldman Sachs sees earnings of 48 cents per share. Keys in the quarter include comps dropping about 0.5 percent, largely on diminished FX benefit, and consistent growth in delivery (+2.5%).
  
  "We expect better margin trends in both North American businesses as the firm digests investments made in lower-margin quarters. International operations will likely remain volatile given macro stresses in Europe. We continue to believe that the sector is at risk from eroding paper demand and an increasing emphasis on technology retailing. Capital allocation will be a key variable, as investors gauge the pace of buybacks."
  
  
• Deutsche Bank is looking for earnings of 46 cents per share. Deutsche commented that it expects continued market share gains for Staples. Easy comps will likely be offset by weaker international trends, and comps will kick-in about 2 points to sales growth. Deutsche remains positive on Staples given recent share gains, its strong balance sheet, and low valuation.
  
  "Looking at each business segment, we expect the biggest margin increases in delivery, with flattish results in retail and International. International margins should be driven by company specific restructurings including supply chain integrations with Corporate Express, head count savings and increased private label."

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 Staples' past performance at Streetinsider's Staples Income Statement.

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