PSCD - 3 Reasons To Consider ODP Corporation

2024-04-12 14:41:16 ET

Summary

• ODP Corporation's stock has underperformed its peers in the small-cap discretionary space over the past 6 months, but we think there's potential for this to change.
• Topline dynamics in H2 could pick up, whilst management continues to do well on the bottom line front.
• Over the next three years, the EPS is poised to grow at a CAGR of 10%, whilst this business can be picked up at a forward P/E of 7.5x.
• ODP has been consistently generating annual FCF of over $200m and this looks set to continue in FY24 as well, providing further support for buyback momentum.
• We like the risk-reward on the standalone and relative strength charts.

Introduction

The stock of The ODP Corporation ( ODP ), an entity which operates an integrated B2B distribution platform, as well as an omnichannel retail consumer business, hasn't quite set the world alight over the past six months. At a time when its peers from the small-cap discretionary space have notched returns of 22%, ODP has managed to generate returns of only half that threshold....

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