Morningstar Rating

Stock Research and Analysis

by Liang Feng

Bulls Say

With approximately $24 billion in annual sales, Staples is the predominant office supplier and benefits from significant scale advantages over its most direct peers.
Staples benefits from a large network of profitable middle-market business customers that have traditionally been fairly sticky, despite OfficeMax's and Office Depot's attempts to capture share.
Staples has reported meaningful growth in nontraditional office categories, such as break room supplies and office furniture, and can continue to diversify into more attractive product categories. Read more 

Bears Say

With relatively low switching costs and little product differentiation, competition is intense in office products, which could lead to price wars that would pressure margins.
Amazon Supply's intrusion into the profitable delivery business could disrupt returns in the most profitable segments of the B2B market.
The secular decline of paper (and associated printing supplies) will act as a headwind for Staples' product and service sales, reducing the firm's differentiation from competing distributors. Read more 

Management

We assign Staples a Standard Stewardship Rating. Members of management have shown themselves to be capable operators, as the firm has routinely outperformed its peers in a highly competitive and commodified market. Except for the underperforming international   Read more 

Profile

Staples is the world's leading office product company, operating more than 2,000 stores in 25 countries. The company generated over $24 billion in 2012, more than direct   Read more 

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