Companies aren't on a hiring spree right now, so it's somewhat surprising that Steelcase's
The office-furniture manufacturer beat Street estimates by with a first-quarter bottom line of $7.5 million, a remarkable turnaround from a loss of $11.1 million in the same quarter last year. The robust numbers fueled investor interest in the stock, sending it up by 7% as trading volume more than doubled.
Top line grew by 18% to $639.4 million from the year earlier quarter, buoyed by growth in all markets. Sales in Europe, the Middle East, and Africa jumped 39%, while America saw growth of 23%.
In spite of rising costs, the gross profit margin remained flat, though the operating margin improved to 3.9% from 0.2%. Steelcase continues to experience strong operating leverage, with growing revenues increasingly doing a better job of absorbing fixed costs.
Although acquisitions weighed on the company's cash flows this quarter, total cash and short-term investments grew more than twofold to $398.8 million. With a debt-to-capital ratio of 43.2% and an interest coverage ratio of 3, Steelcase shouldn't have any trouble servicing its debts.
Steelcase isn't the only furniture company on the upswing. Rival Herman Miller's
However, with the likes of Staples
The Foolish bottom line
Steelcase continues to focus on emerging markets, which have high growth potential. As employment numbers begin to pick up and companies expand, there should be even higher demand for its products.
With the company estimating second-quarter revenue growth of 13% to 17% and things looking better for the sector in general, it's time for Foolish investors to take note.
Fool contributor Neha Chamaria owns no shares of any of the companies mentioned in this article. Motley Fool newsletter services have recommended buying shares of Staples and shorting Office Depot. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.