Quick Win by the Algorithm: Quarterly Earnings Boost ODP

Quick Win by the Algorithm

On November 11, 2016, the I Know First algorithm had predicted a bullish forecast for Office Depot, Inc. (ODP).  ODP had a signal of 37.22 and a predictability of 0.18. In accordance with the algorithm, the company reported a capital gain of 16.03% experiencing a quick win by the algorithm.

Quick Win

Office Depot, Inc. (ODP) is a major retailer of office products and services.  Founded in 1986, the company is headquartered in Boca Raton, Florida.  The company operates in three segments: North American Retail, North American Business Solutions, and International.  The North American Retail Division focuses on the sales of office supplies, technology products, and office furniture.  The North American Business Solutions Division focuses in sales of Office Depot merchandise for agencies and companies of various sizes.  The division also handles the copy and print services.  The International Division focuses on operation overseas in Latin America, Europe, and over 100 stores worldwide.

Quant Trading

On November 2, 2016, Office Depot released its third quarter earnings for the year 2016.  The report surpassed analysts expectations.  As a result, the stock has steadily increased.  Seems like investors may be restoring their faith in the company after its blocked merger with Staples by a federal judge earlier in the year.  Despite revenue and net income decreased compared to last year’s quarter, the company exceeded expectations of adjusted earnings per share of $0.16 compared to expectation of $0.15.  Although a 6% increase from expectation may not seem much, increasing profit for each outstanding share could reward its shareholders in the future.

The company is currently undergoing a cost-saving strategy in order to compete against Amazon and other competitiors. Within the next few years, the company plans to close roughly 300 stores.  Furthermore, the company is looking to sell its European business and consolidate the company even further.  Consequently, these cost saving decisions will improve its financial position in reduce expense.  Office Depot’s strategy in reducing cost and exceeding analyst expectations for its third quarter, may explain why for the past 14 days, the stock increased by approximately 16%.

This bullish forecast on ODP was sent to current I Know First subscribers on November 11th, 2016. 

Before making any trading decisions, consult the latest forecast as the algorithm constantly updates predictions daily. While the algorithm can be used for intra-day trading the predictability tends to become stronger with forecasts over longer time-horizons such as the 1-month, 3-month and 1-year forecasts.

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