Office Stock Story

ODP
 Stock
  

USD 37.20  0.42  1.14%   

19% of stocks are less volatile than Office, and above 99% of all equities are expected to generate higher returns over the next 60 days. Although many risk-takers are getting more into consumer cyclical space, some of us are not very happy with Office Depot's current volatility. We will focus on why it could be a different year for Office Depot shareholders.
Published over three months ago
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How risky is to double down on Office Depot in June?

Office Depot runs under Consumer Cyclical sector within Specialty Retail industry.
Volatility is a rate at which the price of Office Depot or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of Office Depot may increase or decrease. In other words, similar to Office's beta indicator, it measures the risk of Office Depot and helps estimate the fluctuations that may happen in a short period of time. So if prices of Office Depot fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility.
Please read more on our technical analysis page.

How important is Office Depot's Liquidity

Office Depot financial leverage refers to using borrowed capital as a funding source to finance Office Depot ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Office Depot financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Office Depot's total debt and its cash.

How does Office utilize its cash?

To perform a cash flow analysis of Office Depot, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Office Depot is receiving and how much cash it distributes out in a given period. The Office Depot cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities.
Office Depot Net Cash Flow from Operations is very stable at the moment as compared to the past year. Office Depot reported last year Net Cash Flow from Operations of 467 Million

Office Depot Volatility Drivers

Office Depot unsystematic risk is unique to Office Depot and usually not directly affected by the market or economic environment. An example of unsystematic risk is the possibility of poor earnings or a layoff due to coronavirus. One may mitigate nonsystematic risk by buying different securities in the same industry or by buying in different sectors. For example, if you have a position in Office Depot you can also buy Nabors Industries. You can also mitigate this risk by investing in the specialty retail sector as well as in companies having nothing to do with it. This type of risk is also called diversifiable risk and can be understood from analyzing Office Depot important indicators over time. Here we run a correlation analysis between relevant fundamental ratios over at least ten year period to find a relationship in the way they react to changes in Office Depot income statement and balance sheet. Here are more details about Office volatility.
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