Which Office Supply Retailer Stocks have the Strongest Earnings Trends?

Earnings trends are extremely important when evaluating stocks. At Wall St. Cheat Sheet, we view increasing earnings quarter-over-quarter as a simple way to gauge whether costs and the business model are stable. Then we like to analyze whether the company is outperforming peers in the sector. This is what we call the “E-Squared” investment analysis (‘E = Earnings Are Increasing Quarter-Over-Quarter’ + ‘E = Excellent Relative Performance Versus Peers and Sector’).

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Here’s your Cheat Sheet to how the top 3 office supply retailer stocks rank via earnings trends:

Office Depot, Inc. (NYSE:ODP): Current Price $5.23

Fiscal Year 2007 2008 2009 2010 2011
Revenue ($) in millions 15,530 14,500 12,140 11,630 11,490
Diluted EPS ($) 1.43 -5.42 -2.003 -0.2294 0.1681

Sales have fallen every year over the period under review and profits, too, were down with the exception of the somewhat better year in 2011.

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Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter Sep. 30, 2011 Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012
Revenue ($) in millions 2,837 2,970 2,873 2,507 2,693
Diluted EPS ($) 0.28 0.0232 0.14 -0.1779 -0.1916

However, we see that EPS in the June and September 2012 quarters is deep in the red. Office Depot is no longer in the reckoning…

OfficeMax Inc. (NYSE:OMX): Current Price $13.63

Fiscal Year 2007 2008 2009 2010 2011
Revenue ($) in millions 9,082 8,267 7,212 7,150 7,121
Diluted EPS ($) 2.66 -21.90 -0.03 0.79 0.38

Sales have slumped over 21% during these five years and EPS is down over 85%.

These stocks are hitting our Profit Targets. Click here now to discover winning stocks!

Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter Sep. 30, 2011 Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012
Revenue ($) in millions 1,775 1,836 1,873 1,602 1,745
Diluted EPS ($) 0.25 0.04 0.06 0.12 4.92

Though sales have remained essentially flat over the five quarters under review, EPS has shown a rising trend. We therefore keep OfficeMax on our list…

Staples, Inc. (NASDAQ:SPLS): Current Price $14.82

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 19,370 23,080 24,280 24,550 25,020
Diluted EPS ($) 1.38 1.13 1.02 1.21 1.40

We note that Staples has grown revenue every year and that EPS is on an uptrend after 2010.

These stocks are hitting our Profit Targets. Click here now to discover winning stocks!

Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter Oct. 31, 2011 Jan. 31, 2012 Apr. 30, 2012 Jul. 31, 2012 Oct. 31, 2012
Revenue ($) in millions 6,481 6,549 6,105 5,498 6,353
Diluted EPS ($) 0.47 0.40 0.27 0.18 -0.89

Unfortunately, we drop Staples because of the sharp drop in its EPS in the last quarter.

Conclusion

Of the three Office Supply Stocks under consideration here, only OfficeMax satisfies the criteria of earnings increasing quarter-over-quarter according to ourĀ ”E-Squared” investment analysis.

“E = Earnings Are Increasing Quarter-Over-Quarter” is a core component of our successful CHEAT SHEET investing framework. Don’t waste another minute – click here to discover our CHEAT SHEET stock picks now!