Thursday, March 01, 2007

Staples Which Way Now?

Staples, Inc (NASDAQ:SPLS) reports record Q4 sales and earnings. The entire year looks pretty good with a 27% increase in EPS. The numbers include an extra week but once you factor it out the results are still pretty good. To celebrate the company has declared a dividend increase of 32%. A dividend increase is the best form of guidance. These are all great numbers and any investor should be very happy with management.

So why has the stock traded basically sideways since mid fall? It seems that no one is prepared to put their money on the line. Institutional holdings are off by just under 30 million shares or approximately 5.2%. Insider behaviour indicates no significant accumulation. If anything officers seem to be shedding the stock. Directors seem to be exercising options and almost immediately shedding in offsetting transactions.

If you believe in the dividend and the quality of earnings than the market is wrong and investors should increase exposure.