Just when you think you've got Wall Street figured out, it goes and does something logical that totally knocks your worldview off its axis. For example, last week, office furniture specialist Steelcase
What's so strange about that, you ask? Well, ordinarily, Wall Street looks forward rather than backward. A company can turn in a superb quarterly report, but if it warns that the coming quarter will be weak, investors generally try to abandon ship before the actual bad news strikes. We saw this at Ethan Allen
So last week, when Steelcase reported its bumper crop of profits and warned that Q3 would come in a bit light on the earnings front (33% short of Wall Street's hoped-for $0.21 per share), I fully expected to see the usual panic sale -- but it didn't appear. (Perhaps the reason for Wall Street finally deciding to value results over projections is that, at the same time as Steelcase was forecasting a rocky market for office furniture, rival Herman Miller
Which makes me wonder. Reviewing the financial press reports on the two releases, I keyed in on an observation by Morningstar analyst Anthony Chukumba. Asked to comment on Steelcase's relationship to the furniture market in general, he was quoted as saying: "In general, Steelcase numbers track pretty closely with the broader industry." Which got me to thinking: Perhaps Mr. Market has this one backwards. Perhaps, instead of forgiving Steelcase's lowered guidance because Herman Miller said everything is looking peachy, investors should have emphasized Steelcase's more cautious expectations and discounted Herman Miller's prediction.
In three more months, we'll find out.
In other news, there is no news
Sadly, the one bit of information I was most hoping to see in last week's report -- details on the firm's recent acquisition of health-care casegoods maker Softcare Innovations -- went missing entirely. For a deal characterized earlier this month as being an integral part of the firm's "strategy to grow its new health-care division, Nurture by Steelcase," the lack of disclosure of the details of the transaction -- how big a deal it was, how expensive, and so on -- was a particular disappointment.
Relive the excitement of last quarter's furniture news in:
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