Financial Contrast: Big 5 Sporting Goods (BGFV) & Office Depot (ODP)

Big 5 Sporting Goods (NASDAQ: BGFV) and Office Depot (NASDAQ:ODP) are both small-cap retail/wholesale companies, but which is the better business? We will contrast the two companies based on the strength of their risk, analyst recommendations, earnings, institutional ownership, valuation, dividends and profitability.

Volatility and Risk

Big 5 Sporting Goods has a beta of -0.65, suggesting that its share price is 165% less volatile than the S&P 500. Comparatively, Office Depot has a beta of 2.67, suggesting that its share price is 167% more volatile than the S&P 500.

Institutional & Insider Ownership

86.7% of Big 5 Sporting Goods shares are owned by institutional investors. Comparatively, 95.2% of Office Depot shares are owned by institutional investors. 7.9% of Big 5 Sporting Goods shares are owned by insiders. Comparatively, 2.2% of Office Depot shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Big 5 Sporting Goods and Office Depot’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Big 5 Sporting Goods -0.56% 2.86% 1.24%
Office Depot 1.01% 9.60% 3.38%

Earnings & Valuation

This table compares Big 5 Sporting Goods and Office Depot’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Big 5 Sporting Goods $1.01 billion 0.17 $1.10 million $0.57 14.12
Office Depot $10.24 billion 0.13 $181.00 million $0.45 5.49

Office Depot has higher revenue and earnings than Big 5 Sporting Goods. Office Depot is trading at a lower price-to-earnings ratio than Big 5 Sporting Goods, indicating that it is currently the more affordable of the two stocks.

Dividends

Big 5 Sporting Goods pays an annual dividend of $0.60 per share and has a dividend yield of 7.5%. Office Depot pays an annual dividend of $0.10 per share and has a dividend yield of 4.0%. Big 5 Sporting Goods pays out 105.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Office Depot pays out 22.2% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Big 5 Sporting Goods and Office Depot, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Big 5 Sporting Goods 0 2 0 0 2.00
Office Depot 1 3 1 0 2.00

Big 5 Sporting Goods presently has a consensus price target of $9.00, suggesting a potential upside of 11.80%. Office Depot has a consensus price target of $4.29, suggesting a potential upside of 73.58%. Given Office Depot’s higher probable upside, analysts plainly believe Office Depot is more favorable than Big 5 Sporting Goods.

Summary

Office Depot beats Big 5 Sporting Goods on 10 of the 15 factors compared between the two stocks.

About Big 5 Sporting Goods

Big 5 Sporting Goods Corporation operates as a sporting goods retailer in the western United States. The company offers athletic shoes, apparel, and accessories, as well as a selection of outdoor and athletic equipment for team sports, fitness, camping, hunting, fishing, tennis, golf, winter and summer recreation, and roller sports. It also provides private label items, such as shoes, apparel, camping equipment, fishing supplies, and snow sport equipment. The company sells private label merchandise under its own trademarks comprising Golden Bear, Harsh, Pacifica, and Rugged Exposure; and licensed trademarks, including Beach Feet, Bearpaw, Body Glove, Morrow, and The Realm. As of December 31, 2017, it operated 435 stores and an e-commerce platform under the Big 5 Sporting Goods name. Big 5 Sporting Goods Corporation was founded in 1955 and is headquartered in El Segundo, California.

About Office Depot

Office Depot, Inc., together with its subsidiaries, provides various products and services. It operates in three divisions: Retail, Business Solutions, and CompuCom. The Retail division operates retail stores, which offer office supplies; technology products and solutions; business machines and related supplies; print, cleaning, breakroom, and facilities products; and office furniture in the United States, Puerto Rico, and the U.S. Virgin Islands. Its stores also provide printing, reproduction, mailing, and shipping services. As of December 31, 2017, this division operated 1,378 office supply stores. The Business Solutions division sells office supply products and services through sales forces, catalogs, and telesales, as well as through Internet sites in the United States, Puerto Rico, U.S. Virgin Islands, and Canada. The CompuCom division sells information technology (IT) outsourcing services and products in the United States, Canada, and Costa Rica. It offers a range of solutions, including end user computing (tablets, smartphones, laptops, and desktops), data center management, service desk, network infrastructure, and IT workforce solutions. This division serves its customers through IT service and sales representatives and telesales, as well as Internet sites. The company offers its products under various labels, including Office Depot, OfficeMax, Foray, Ativa, TUL, Realspace, WorkPro, Brenton Studio, Highmark, and Grand & Toy. Office Depot, Inc. was founded in 1986 and is headquartered in Boca Raton, Florida.

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