Is It Time to Give Up On Staples?

With shares of Staples (NASDAQ:SPLS) trading at around $11.53, is SPLS an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

The days of exceptional growth are clearly over. At the present time, Staples is looking for ways to survive. This is still a profitable company, but an EPS of 1.38 has been projected for 2013, which isn’t cause for celebration. If you look at the last quarter on a YoY basis, you will also see a decline in revenue and earnings. In addition to that, competition is ferocious and COO Michael A. Miles Jr. resigned on Monday. If that’s not enough, Staples is closing several stores and has a plan of shrinking square footage by 15 percent over the next three years. These are good moves to help the bottom line in the short run, but downsizing is rarely a positive sign when it comes to long-term future potential.

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On the brighter side, Staples is aiming for product expansion to draw more traffic, increased online exposure and growth, and a hefty amount of mobile advertising. Staples has the money to accomplish these goals if their strategies are carefully and aggressively implemented. Staples is also one of the fastest online shippers. Once more people become aware of this, it could lead to increased sales.

Now let’s take a look at some important numbers.