What to Expect From Staples Earnings

Staples Inc. (NASDAQ: SPLS) is expected to report its fiscal third-quarter earnings before the markets open on Wednesday. The consensus estimates from Thomson Reuters call for $0.35 in earnings per share (EPS) on $5.67 billion in revenue. In the same period of the previous year, the specialty retailer posted EPS of $0.37 and revenue of $5.96 billion.

As 2015 is about a month and a half from being through, the transaction between Staples and Office Depot Inc. (NASDAQ: ODP) is about to come to a close as well. Under the terms of the agreement, Office Depot shareholders will receive $7.25 in cash and 0.2188 of a share in Staples stock at closing for each Office Depot share. The acquisition was overwhelmingly approved by Office Depot shareholders back in June, but it is still at risk due to regulatory approval.

In October we noted that Staples and Office Depot may have found another snag in how smooth this potential merger will go. There remain many questions as to whether the merger ultimately gets approved. Staples announced that it and Office Depot have mutually agreed with the Federal Trade Commission (FTC) to extend the review period for the pending acquisition of Office Depot. The FTC has agreed to issue its decision regarding this merger transaction by December 8, 2015.

Regulators in Australia, New Zealand and China already have approved the transaction. Staples further said that it and Office Depot are continuing to work with the proper regulatory authorities in the European Union, the United States and Canada to get approval for this merger.

Ahead of the earnings report, a few analysts weighed in on Staples:

• Telsey Advisory group reiterated an Outperform rating for the company.
• KeyBanc reiterated a Buy rating with a $20 price target.
• Jefferies reiterated a Buy rating with a $20 price target.
• Citigroup has a Neutral rating and lowered its price target to $15 from $18.

So far in 2015, Staples has underperformed the market, with the stock down 28%. However, over the past 52 weeks the stock is only down just over 2%.

Shares of Staples were trading down less than 1% at $12.61 midday Tuesday, with a consensus analyst price target of $18.15 and a 52-week trading range of $11.61 to $19.40.

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