Herman Miller Can't Afford to Relax

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Just two days ago, we heard from office furniture maker Steelcase (NYSE: SCS), and saw how its stock was pushed lower as investors focused on its guidance, rather than its most recent performance. Not to be outdone, Herman Miller (Nasdaq: MLHR) reported impressive gains in its fiscal fourth-quarter and full-year results, only to see its stock plummet nearly 10% on what investors apparently considered mediocre guidance.

Earnings at Herman Miller jumped 26.8% and 30.1% in the fourth quarter and full year, respectively. Sales improved 9.3% in the quarter, with North American sales gaining 7.5% and non-North American sales improving 19.1%. Meanwhile, orders and backlog were also higher, so those numbers should remain strong.

Now, we know Herman Miller finished the year well, and that it has sufficient orders heading into next year. So what was it about its guidance that sent investors running for the exits? For the first quarter, the company expects to earn $0.47 to $0.53 per share, which would represent growth of 9% to 23% from the prior year. Unfortunately, analysts had Herman Miller penciled in for even more robust growth, expecting earnings of $0.57 per share.

Investors may have been concerned that the company has recently had to contend with higher initial manufacturing costs. However, demand for its new products is up, and it has countered higher costs by increasing its prices, with favorable results.

I'm starting to wonder whether the Street has something against Herman Miller. Just last quarter, its stock sank because its earnings came in two pennies shy of estimates, though they were up 52% from the prior year.

After the recent harsh treatment Herman Miller has endured, individuals considering investing in the company may want to pull up a chair and take a closer look at its potential. I suspect that those who do will be quite comfortable with their selection.

Sit back, relax, and read more about the exciting business of office furniture:

• Steelcase Scores
• Have a Seat, Herman Miller
• Herman Miller: The Comfortable Quarter

Fool contributor Mike Cianciolo welcomes feedback and doesn't own any of the companies in this article.