2024-07-17 14:25:45 ET
Summary
- ODP Corporation stock has underperformed its small-cap peers by -26% YTD, with pronounced weakness following the Q1 results in May.
- Q2 may not be the strongest quarter given seasonal weakness and sizeable upward revisions to the EPS, but forward looking guidance for H2 is expected to be positive.
- Project Core's salutary impact is expected to reflect well on the bottom line numbers for this year and next, and despite positive revisions in the EPS, PE valuations look incredibly cheap.
- After only generating $7m of FCF in Q1, the quarterly FCF run rate is expected to increase by close to 9x, although some inventory build-up ahead of the back-to-school season may see meaningful benefits come through only in H2.
- The risk-reward on the charts looks even more attractive.
Introduction
The stock of ODP Corporation ( ODP ), an entity rendering products, services, and tech solutions via the B2B and B2C route, has experienced a difficult 2024 so far. On a YTD basis, whilst its peers from the Russell 2000 Index have notched up healthy gains within the early teens’ threshold, ODP has consistently underperformed and is down by -26% overall....
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Use The Dip To Buy ODP Corporation Ahead Of Its Q2 Earnings