Steelcase Inc. (SCS, Financial) is slated to reveal its fourth-quarter results on March 24, 2015, with an optimistic market sentiment that expects the company to book earnings of $0.21 a share compared to the year-ago quarter’s $0.18 a share. The company competes with Herman Miller Inc. (MLHR, Financial), HNI Corp. (HNI, Financial) and the privately held Haworth Inc. in the Business Equipment and Technology Products market. Since the company’s shares bottomed under $5 in September 2011, Steelcase shares have gained nearly 300% and are currently up 10% since its last earnings release.
In the first three quarters of fiscal 2015, Steelcase saw its revenue growing at an average of 4.5% year over year, although diluted EPS remained largely flat at $0.50 a share. Revenue increased 3% to $800 million during the third quarter, compared to the prior-year quarter. The company also returned around $14 million to shareholders during the quarter, with $13 million through a cash dividend payout of $1.05 a share and $1 million through share buybacks, much to the delight of investors. For the fourth quarter, Steelcase has projected a 7%-10% year-over-year organic growth in revenues while the company expected seasonality to bring in a 2%-5% organic decline compared to the previous three quarters of the fiscal. Taking into consideration the negative effect of certain one-time items, Steelcase pegged its fourth quarter earnings in the range of $0.16-$0.20 a share.
Improving economy likely to boost sales
The office furniture industry is rather cyclical, with traditional industry drivers such as office vacancy rates, corporate profits, non-residential construction, capital spending and white-collar job growth being some of the major factors influencing the sector. With the U.S. economy showing signs of improvement, many of these factors especially the office vacancy rate and net absorption of office space, are expected to trend strongly in favor of Steelcase, with more rented office space equating growth in demand for the company's products. At the same time, the company management sees the changing nature of work to be a significant driving force behind demand in the industry in the years to come. Consequently, the company management said it is keyed in to the shifting preferences in the modern office and is working towards altering how it researches and designs products for the changing marketplace.
Final thoughts
Consensus estimates peg Steelcase’s fourth quarter earnings at $0.21 a share while for the full fiscal 2015; experts are looking at earnings of $1.15 a share on a 3% sales growth to $3.08 billion. Experts foresee the company logging revenues of $769.1 million for the quarter, down 1% from the prior-year quarter’s $779.4 million. While an increase in revenues of slightly less than 5% to $3.2 billion is anticipated for fiscal 2016, EPS is expected to surge 28% to $1.14. Steelcase shares have mostly traded in the $16.33-$19.35 range in the last three months, hitting an all-time high of $19.80 on March 20, 2015. The Steelcase stock carries a price estimate of $20.30 a share and a "buy" guidance.
