Office Depot, Inc. (NASDAQ:ODP) is a company with exceptional fundamental characteristics. Upon building up an investment case for a stock, we should look at various aspects. In the case of ODP, it is a financially-robust company with a a strong track record high-grade dividend payments, trading at a great value. Below is a brief commentary on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, take a look at the report on Office Depot here.
Very undervalued with excellent balance sheet and pays a dividend
ODP is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This suggests prudent control over cash and cost by management, which is a key determinant of the company’s health. ODP’s has produced operating cash levels of 0.41x total debt over the past year, which implies that ODP’s management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings. ODP’s share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. Investors have the opportunity to buy into the stock to reap capital gains, if ODP’s projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the company. Compared to the rest of the specialty retail industry, ODP is also trading below its peers, relative to earnings generated. This supports the theory that ODP is potentially underpriced.
ODP is considered one of the top dividend payers in the market, and its profitability ensures that dividends are well-covered by its net income.
For Office Depot, there are three pertinent factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for ODP’s future growth? Take a look at our free research report of analyst consensus for ODP’s outlook.
- Historical Performance: What has ODP’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of ODP? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.