Please ensure Javascript is enabled for purposes of website accessibility

Why Steelcase, Inc. Stock Popped Today

By Steve Symington - Sep 22, 2016 at 4:33PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares of the office furniture company jumped through the roof with a solid quarterly report.

Image source: Steelcase, Inc.

What happened

Shares of Steelcase, Inc. (SCS 1.26%) rose 12.8% Thursday after the office furniture specialist released weaker-than-expected fiscal second-quarter 2017 results, but offered encouraging guidance for a return to growth going forward. 

So what

Quarterly revenue fell 7% year over year, to $758 million, and translated to net income of $38.2 million, or $0.31 per diluted share. Excluding restructuring charges, Steelcase's net income fell 8.6% year over year, to $0.32 per diluted share. By contrast, Steelcase's outlook called for revenue in the range of $770 million to $795 million, but roughly the same earnings per share (on both a GAAP and adjusted basis) in the range of $0.29 to $0.33.

Steelcase CEO Jim Keane explained that July orders fell 8% in the Americas, leading to lower overall revenue than anticipated. But Keane also added:

While the domestic economic and political environments remain uncertain, Americas orders improved in August and early September on the strength of new products, our project opportunity pipeline for the next twelve months has expanded, and we are expecting growth in the third quarter compared to the prior year. Our [Europe, the Middle East, and Africa] business also continues to improve, although Brexit and other political factors are contributing to persistent headwinds, impacting our expectations for the second half of the year.

Now what

More specifically, Steelcase expects fiscal third-quarter revenue of $795 million to $820 million, including organic revenue growth of 1% to 4%. On the bottom line, Steelcase expects third-quarter earnings per diluted share of $0.32 to $0.36, including a $0.01 per-share negative impact from restructuring costs.

By contrast, analysts' consensus estimates predicted Steelcase would achieve revenue of $807.4 million in the quarter, and adjusted earnings of $0.35 per share.

Of course, that guidance wasn't overwhelmingly positive, and more than anything confirmed what Wall Street was hoping to hear. So in light of its relative underperformance in Q2, it's somewhat surprising to see shares of Steelcase climb so much in today's trading. To be fair, however, it's worth noting shares are still down more than 20% over the past year, indicating perhaps investors were were willing to buy Steelcase stock in light of any perceived turning point for the company.

In the end, while I'm not personally anxious to dive in and buy Steelcase stock today, I think it's worth adding to your watch list to keep tabs on its progress.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Steelcase Inc. Stock Quote
Steelcase Inc.
SCS
$12.05 (1.26%) $0.15

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
327%
 
S&P 500 Returns
116%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/19/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.