The Zacks Analyst Blog Highlights:Office Depot, Staples, OfficeMax, Fluor and Jacob's Engineering Group

CHICAGO, Oct. 30, 2012 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Office Depot Inc. (NYSE:ODP), Staples Inc. (Nasdaq:SPLS), OfficeMax Inc. (NYSE:OMX), Fluor Corporation (NYSE:FLR) and Jacob's Engineering Group (NYSE:JEC).

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Here are highlights from Monday's Analyst Blog:

Earnings Preview: Office Depot

Office Depot Inc. (NYSE:ODP) – one of the leading suppliers of office products and services around the world – is expected to report its third quarter 2012 financial results on Tuesday, October 30, 2012.

The current Zacks Consensus Estimate for the quarter stands at 1 cent per share, which is above the break-even earnings reported in the comparable prior-year period. Revenue, as per the Zacks Consensus Estimate, is pegged at $2,731 million.

Last Quarter Recap

Office Depot posted second-quarter 2012 results with a loss of 14 cents a share that sharply widened from a loss of 6 cents delivered in the year-ago quarter, and also fared worse than the Zacks Consensus Estimate of a loss of 9 cents. The dismal results were due to weak top-line performance on account of soft sales in North America and Europe.

The company's total revenue of $2,507.2 million decreased 7% from the prior-year quarter and also fell short of the Zacks Consensus Estimate of $2,584 million. In constant currency, revenue slipped 5%.

Agreement of Estimate Revision

For the to-be-reported quarter, the estimates remain unchanged with no estimate going up or down (out of 14) over the last 30 days or 7 days. Furthermore, the story remains the same for fiscal 2012. The estimates were kept intact mainly due to lack of news or event, which could have a direct or indirect impact on these.

Magnitude of Estimate Revision

For the third quarter 2012, the estimate remains stagnant at 1 cent per share over the last 7 or 30 days, mainly due to the absence of estimate revision, whereas for 2012, the estimate remained unchanged at a loss of 3 cents over the last 7 or 30 days.

Mixed Earnings Surprise History

With respect to earnings surprise, Office Depot has missed the Zacks Consensus Estimate in two quarters over the last four quarters, whereas the estimates met and surpassed in one quarter each. The average remained at a negative of 77.8%.

Conclusion

Office Depot is containing costs, closing underperforming stores, managing inventory and focusing on providing innovative products and services, which should all contribute to margin improvement. In order to increase store sales productivity, the company is concentrating on remodeling and introducing smaller format stores. However, we still remain cautious about the macroeconomic environment, with small businesses and consumers still remaining watchful on their spending.

As a result, we maintain our long term 'Neutral' recommendation on the stock. However, Office Depot, which competes with Staples Inc. (Nasdaq:SPLS) and OfficeMax Inc. (NYSE:OMX), carries a Zacks #5 Rank, implying a short-term 'Strong Sell' rating on the stock for the coming 1-3 months, and reflects negative average earnings surprise.

Earnings Preview: Fluor Corp.

Fluor Corporation (NYSE:FLR) is slated to release its third-quarter 2012 earnings results on Thursday, November 1, 2012. The current Zacks Consensus Estimate for third-quarter earnings per share (EPS) is 97 cents, representing annualized growth of 24.36%.

FLR's earnings were above the Zacks Consensus Estimate in first and second quarters of 2012 and also in the fourth quarter of 2011 while earnings were below the Estimate in the third quarter of 2011. The company's average positive earnings surprise for the trailing four quarters was 2.35%.

Third Quarter Highlights

FLIR Systems reported its second-quarter 2012 earnings from continuing operations of $0.95, 3.3% higher than the Zacks Consensus Estimate of $0.92 and up 1.1% from the prior-year earnings of $0.94. Profits during the quarter were driven by end-market diversification and strong international presence.

Total revenue for the quarter grew 18.1% year over year to $7.1 billion on the back of higher revenues across all the company's segments. Total backlog as of June 30, 2012, was about $43.0 billion compared with $2.7 billion as of June 30, 2011.

Revenue from the Oil & Gas segment increased by 16% year over year, driven by an improvement in the upstream business. Industrial & Infrastructure revenue was up 29.2% due to increased mining and metals businesses. Government segment revenue was up 2.7% while Global Services revenue declined by 0.6%. Power segment revenue was flat year over year, impacted by a relatively weak demand for new power generation.

Agreement of Estimate Revisions  

None of the analysts have either increased or decreased their estimates in the last 7 or 30 days.

Magnitude of Estimate Revisions  

In the last 7 or 30 days, there was no change in earnings estimate for the third-quarter 2012, fourth-quarter 2012, full-year 2012 or full-year 2013.

Our Take  

Fluor's favorable contract mix, diverse service offerings and strong relationships around the world allow it to sustain operating margin going forward relative to its peers without diminishing growth potential.

Driven by the company's strong performance in the second quarter, management had raised the lower end of its 2012 earnings guidance. Earnings per share are now expected in the range of $3.50 to $3.80, up from $3.40 to $3.80 projected earlier. The company's solid earnings and strong new awards and backlog are favorable factors.

Fluor Corporation is one of the largest professional services firms, providing engineering, procurement, construction and maintenance as well as project management services on a global basis. It serves a diverse set of industries worldwide including oil and gas, chemical and petrochemicals, transportation, mining and metals, power, life sciences and manufacturing. It is also a primary service provider to the U.S. federal government.

Fluor performs operations and maintenance activities for major industrial clients and, in some cases, operate and maintain their equipment fleet. The company's prime competitor is Jacob's Engineering Group (NYSE:JEC).

We continue to maintain a Neutral rating on Fluor for the long term. The company has a Zacks #3 Rank (Hold recommendation) over the next one-to-three months.

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