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Is Office Depot (ODP) Stock Undervalued Right Now?

Zacks Equity Research
·2 min read

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is Office Depot (ODP). ODP is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock holds a P/E ratio of 4.74, while its industry has an average P/E of 13.80. Over the past year, ODP's Forward P/E has been as high as 7.12 and as low as 3.19, with a median of 5.21.

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We also note that ODP holds a PEG ratio of 0.69. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ODP's industry currently sports an average PEG of 1.34. Within the past year, ODP's PEG has been as high as 0.94 and as low as 0.27, with a median of 0.47.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Office Depot is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, ODP feels like a great value stock at the moment.


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Zacks Investment Research