Is ACCO Brands (ACCO) a Ridiculously Cheap Stock to Buy?

ACCO Brands (NYSE: ACCO), the office and consumer products giant behind brands like Swingline, Wilson Jones, and PowerA gaming accessories, has seen its stock price plummet to near-record lows in early 2025. With a market cap of just $325 million as of April—a 36% decline from a year earlier—and a share price hovering around $3.60, investors are left wondering: Is this a value trap or a hidden gem? Let’s dissect ACCO’s fundamentals, risks, and potential catalysts to find out.

Valuation: A Discounted Player in a Tough Market

ACCO’s valuation metrics paint a mixed picture. Its price-to-sales (P/S) ratio of 0.26x (calculated as market cap divided by 2024 revenue of $1.7 billion) is strikingly low, suggesting the stock trades at a steep discount relative to its top line. By comparison, peer Avery Dennison (AVY) trades at a P/S of 1.1x, and Xerox (XRX) at 0.5x. This could imply ACCO is undervalued—if its revenue stabilizes.

However, its trailing P/E ratio is -4.5, reflecting a net loss in recent quarters. The company reported a $101.6 million net loss in 2024, driven by restructuring charges and declining sales. While ACCO aims to turn this around via a $100 million annual cost-savings program by 2026, the path to profitability remains uncertain.

The stock’s 52-week trading range ($3.47 to $6.44) underscores its volatility. A -28% drop since February has pushed it near historic lows, creating a “cheap” appearance—though fundamentals haven’t yet followed.

Financial Health: Cost Cuts vs. Revenue Headwinds

ACCO’s 2025 guidance calls for $1.00–$1.05 EPS and $1.6 billion in revenue, both below initial estimates. While management cites progress on cost savings—$25 million achieved in Q1 2024—revenue has been shrinking. Full-year 2024 sales fell 9.1% to $1.67 billion, with further declines of 1–5% forecast for 2025.

Debt is manageable but not negligible. Its consolidated leverage ratio (debt/EBITDA) is 3.4x, below its 4.0x covenant limit. However, net debt of $766 million and a debt-to-equity ratio of 1.38 hint at leverage risks if cash flows falter.

The company’s $132 million free cash flow in 2024 and plans to maintain a 6% dividend yield (despite negative earnings) signal a commitment to shareholders. Yet, sustaining the dividend amid losses could strain liquidity.

Growth Strategies: Can M&A and New Products Turn the Tide?

ACCO is betting on strategic acquisitions in adjacent categories like gaming (via PowerA) and sustainable tech accessories to drive growth. It also aims to expand distribution into value stores and Asia-Pacific markets.

The PowerA brand—a key acquisition—showed promise in Q4 2024, contributing $39 million in revenue. Expanding this segment could offset declines in traditional office products. However, execution is critical: ACCO’s Q1 2025 revenue is projected to drop 11% year-over-year, highlighting ongoing weakness in core markets.

Risks and Challenges

1. Earnings Volatility: Quarterly EPS swings from a $0.39 beat in Q4 2024 to a Q1 2025 loss underscore operational instability.
2. External Pressures: New tariffs on Chinese imports and a strong dollar could cut Q1 sales by 4–8%, while retailers remain cautious on inventory.
3. Debt and Dividend Sustainability: With a payout ratio of -28% (due to losses), the dividend’s longevity is questionable.

Analyst and Investor Sentiment

Analysts are cautiously optimistic. Barrington Research maintains an “Outperform” rating with a $7 price target, while others see a $10.67 average target. Institutional ownership remains high (84.56%), with Vanguard increasing its stake in late 2024.

However, the stock’s beta of 1.60 signals high volatility, and its 8.3% dividend yield—while enticing—may reflect desperation rather than confidence.

Conclusion: A Gamble on Turnaround or a Value Trap?

ACCO Brands presents a high-risk, high-reward proposition. Its 0.26x P/S ratio and $3.60 share price make it look cheap, but its negative earnings, declining revenue, and debt burden are red flags.

Bull Case: If cost savings hit targets ($100 million by 2026), PowerA drives growth, and sales stabilize, ACCO could rebound. Analysts’ $10.67 price target implies 195% upside, and the $1.29 EPS by 2026 forecast suggests a path to profitability.

Bear Case: Persistent revenue declines, margin pressure, and macro headwinds (tariffs, weak consumer demand) could keep ACCO in the red. Its $325 million market cap is small enough to warrant caution, as missteps could lead to further losses.

Final Take: ACCO is not a “set it and forget it” investment. It requires faith in management’s turnaround plan and patience through volatility. For aggressive investors willing to bet on a rebound, it offers asymmetric upside. For others, wait for clearer signs of stabilization.

As of April 2025, ACCO’s valuation is as much about hope as it is about math—making it a stock for speculators, not conservatives.