SPLS

Staples Inc

Consumer


Presented:09/27/2016
Price:$8.36
Cap:$5.42B
Current Price:$10.25
Cap:$6.69B

Presented

Date09/27/2016
Price$8.36
Market Cap$5.42B
Ent Value$6.47B
P/E RatioN/A
Book Value$7.02
Div Yield0.06%
Shares O/S648.00M
Ave Daily Vol5,842,752
Short Int2.56%

Current

Price$10.25
Market Cap$6.69B
Staples, Inc. engages in the provision of office supplies retail. It offers a range of products of copy and print and technologies through an integrated retail and online shopping. It operates through the following segments: North American Stores and Online, North American Commercial, and International Operations. The North American Stores and Online segment includes the company's retail stores and Staples.com businesses in the U.S. and Canada. The North American Commercial segment consists of the U.S. and Canadian businesses that sell and deliver products and services directly to businesses, including Staples Advantage and Quill.com. The International Operations segment covers operations in twenty three countries in Europe, Australia, South America, and Asia. The company was founded by Thomas G. Stemberg in 1985 and is headquartered in Framingham, MA.

Publicly traded companies mentioned herein: Office Depot Inc (ODP), Staples Inc (SPLS)

Highlights

In May 2016 the US District Court granted the FTC’s preliminary injunction to block the Staples (SPLS) / Office Depot (ODP) merger based on antitrust concerns. The presenter explained how the deal itself frustrated longer-term investors, and then the merger arbitrage funds were “flushed out” when the deal fell apart. While he believes SPLS faces a number of challenges, he also thinks the stock is trading at a compelling level (down just over 10% year-to-date); and at ~$8.50 he likes the risk/ reward setup and is long. SPLS’s balance sheet is under-levered, the dividend yield is attractive (5.75%), and “we’re not taking a lot of risk to find out if the new CEO - Shira Goodman, who had served as interim CEO since June 2016 - can deliver”. Additionally, he sees optionality around the potential for private equity or another buyer to take SPLS out.

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Idea Discussion

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