Office Depot, Inc. (ODP): Is This Insider Trading a Scary Sign?

After opening Thursday at around $2.6, Office Depot, Inc. (NASDAQ:ODP) stock surged to as high as $2.62. It then made a downturn, dipping as low as $2.51. Although the stock bounced a bit into the close, it finished the day at $2.55, down -0.08 points or -3.04 percent on the day. The final volume for the day was 3.579 million, which was less than its average volume. The firm is left with a market cap of $1.41 billion and now has 551 million shares outstanding. Office Depot, Inc. (ODP) stock has lost -21.05 percent of market value in 21 trading days.

ODP stock has a trailing 3-year beta of 2.72, offering the possibility of a higher rate of return, but also posing more risk. The portion of a company’s profit allocated to each outstanding share of common stock was -$0.02 a share in the trailing twelve months. The stock’s value has fallen -1.16 percent year to date (YTD) against a decline of -28.37 percent in 12 month’s time. The company’s shares still trade -30.33 percent away from its 1-year high of $3.66 and 27.5 percent up from 52-week low of $2.00. The average consensus rating on the company is 3, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a hold.

Office Depot, Inc. (ODP) will probably climb 43.92 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $4.5 price as 12price as 12-month high target. This represents a whopping 76.47 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $4, which represents a return potential of 56.86 percent when compared to the closing price of the stock of $2.55 on Thursday, January 03. The lowest price target for the stock is $2.5 — slightly more than -1.96 percent from ODP’s current share price.

History has shown that shares in Office Depot, Inc. have gone down on 19 different earnings reaction days and are predicted to add 0.08 percent when the company reports upcoming earnings.

Let’s take a look at some insider activity at Office Depot, Inc. (NASDAQ:ODP) and see the pattern. The earliest insider trade took place on 06/04/2018. Vassalluzzo Joseph gathered a total of 58.8 thousand shares of company at average share price of $2.55. The total for the purchase was set at $149.94 thousand. After this transaction, the Chairman of the Board account balance stood at 143.83 thousand shares. The stock lost 0 percent since that insider purchase. On 05/31/2018, Travis Nigel, Director, purchased 10 thousand shares at a price per share of $2.39. This added 23.9 thousand shares to the insider’s fortune and the stock saw a 6.69 percent rally in value since the news became public. This transaction left 324.4 thousand shares in the Director account.

On 05/30/2018, EVP & CFO Lower Joseph T performed a purchase transaction worth $47.8 thousand. This purchase at $2.39 each has added 20 thousand shares into the insider’s portfolio position. Meanwhile, shares have recorded 6.69 percent increase since the transaction was reported. The insider now is left with 872.55 thousand shares remaining in the account. Rabinovitch Michael, who performs the Sr Vice President & Controller job, sold 1.35 thousand shares for $4.64 thousand. The disposal occurred on 01/08/2018 was priced at $3.43 per share. The share price plunged -25.66 percent since the reporting date. Rabinovitch Michael now left with a stake of 83.84 thousand ODP stock worth $213.79 thousand after the insider selling.

The stock is currently hovering around the first support level of $2.5. Below this, the next support is placed in the zone of $2.45. Till the time, the ODP stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 45.76 on daily chart, which may remain a cause for concern. If the price breaks below $2.45 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $2.61 mark may result into a pull-back move towards $2.67 level.

Shares of Office Depot, Inc. (ODP) are trading at a P/E ratio of 4.43 times earnings reported for the past 12 months. The industry ODP operates in has an average P/E of 33.25. Its P/E ratio went as low as 3.59X and as high as 33.78 over the 5-year span.Further, it is sporting a 0.13 on the Price-to-Sales ratio. Compare this with the industry average P/S of 1.97. 23.4 percent is the gross profit margin for Office Depot, Inc. and operating margin sits at 2.6 percent. Along with this, the net profit margin is 0.6 percent.