Why Staples, Inc. Stock Popped (Again) Today
What happened
Shares ofStaples Inc.(NASDAQ: SPLS) climbed as much as 5.8% on Wednesday, and traded up 3.4% as of 3:30 p.m. EST as investors speculated that the stock is still undervalued followingreports on Tuesday that the company is considering selling itself.
So what
Today's jump follows a nearly 10% pop yesterday, which was driven by a Wall Street Journal report stating Staples is holding early acquisition talks "with a small number of possible private-equity bidders."As Barron'sAndrew Bary argues, however, Staples stock could still be worth buying given its "low valuation, potential catalysts, and near 5% dividend yield."
Image source: Staples.
Now what
In addition to the healthy dividend, Staples stock is still down 10% over the past year and currently trades at just 11 times this year's expected earnings. And when the company released in-line Q4 2016 results a few weeks ago, CEO Shira Goodman insisted, "I'm increasingly confident that we have the right plan and the right team to transform Staples and get back to sustainable sales and earnings growth."
That could be exactly why Staples' potential suitors are trying to opportunistically purchase the company in the first place. But if any acquisition premium that's offered fails to appease shareholders, it seems safe to expect the market will cry foul.
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Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.