Officemax Incorporated, (OMX), founded in 1913 and headquartered in Naperville, Illinois, is engaged in both business-to-business and retail office products distribution. The company provides office supplies and paper, print and document services, technology products and solutions, and office furniture to large, medium and small businesses, government offices and consumers.
OMX is viewed as one of the best stocks to buy at this moment for its impressive quarterly results and upward trending earnings momentum as well as its business fundamentals.
Financial performance:
For the recent fiscal quarter ended June 31, 2012, the the third-largest office supply chain realized a net income of $10.7 million, or 12 cents per share, compared to a net loss of $3 million, or 4 cents per share, despite a 2.7% decrease in its sales and 1.8% fall in its same-store sales. The company attributed the decline in sales to fewer stores opened this year and unfavorable currency translation. Analysts had averagely expected earnings of 7 cents per share. Operating income was $23.1 million, well above $4 million in the same period of last year.
OfficeMax estimates its third fiscal quarter sales to be approximately flat, to slightly higher than a year ago’s 1.774 billion and anticipates its full fiscal year sales in line with the previous year’s $7.121 billion. Analysts are expecting the company to report sales of $1.786 billion for the third quarter of 2012 and $7.081 billion for the fiscal year 2012.
Operations:
OfficeMax also declared to reinstate the payment of quarterly cash dividends on the company’s common stock after more than three-year hiatus as the better-than-expected Q2 2012 results. The first quarterly dividend following this decision will be $0.02 per share, or $0.08 per share on an annualized basis, payable on August 31, 2012, to shareholders of record as of the close of business on August 15, 2012. Managing Director Benjamin Nahum said the company has continued to streamline and contain costs in a challenging economic environment, which puts them in a better position to take steps to address the capital structure. The company should dispose of noncore Australian and New Zealand assets and put proceeds into share repurchases or dividends. Currently, Alexza is seeking a buyer for Croxley, its wholesale business in New Zealand.
The company is also in the early stage of a new strategic plan including five years of heightened store closures as well as efforts to improve its supply chain, rein in promotions and stress high-margin private brands.
Stock Performance:
OMX stock is viewed as the best stocks to buy by analysts as its “Overweight” rating. According to the data provided by FactSet Research, the average price target of OMX stock is $7.65, implying a 52.29% upside potential for the latest OMX stock closing price of $5.09 on August 13, 2012. OMX shares have a 52-week range between $3.90 and $6.56 and have a strong three-month average trading volume of $1.45 million shares. The current OMX stock price is 8.07% above its 50-day moving average of $4.71 and 1.39% higher than its 200-day moving average of $5.02. OMX stock is traded as a bargain at a trailing P/E ratio of 11.09 by comparison to the industry average of 15.54 and priced modestly at a forward PEG ratio of 0.69 by comparison to the industry average of 0.69. OfficeMax has P/S ratio of 0.06, much lower than the peer group average of 0.71; this is also a key metric of the best stocks. OfficeMax’s market capitalization is $440.92 million.