Steelcase Earnings: An Early Look

Earnings season is just about over, with almost all companies already having reported their quarterly results. But there are still a few companies left to report, and Steelcase (SCS -2.58%) is about to release its quarterly earnings. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Steelcase makes furniture and other architectural products primarily for business use, as well as electronic whiteboards and other communication-related products for educational, business, and government customers. Yet as businesses have implemented cost-cutting measures, many have had to reduce their spending on non-essential items. Let's take an early look at what's been happening with Steelcase over the past quarter and what we're likely to see in its quarterly report on Wednesday.

Stats on Steelcase

Source: Yahoo! Finance.

Will Steelcase make investors feel comfortable this quarter?
Analysts have been rock-solid in their calls on Steelcase's earnings lately, having not budged on both most-recent quarter and full-year fiscal 2014 estimates throughout the past several months. The stock, though, has moved favorably, rising nearly 20% since mid-December.

Despite tough economic environment, Steelcase has done a good job of identifying a niche that has been able to keep growing. By targeting large corporate customers with high-end office furniture, Steelcase has drilled down with an active focus on providing what its clients see as necessities while still maintaining its overall profitability.

Still, Steelcase faces strong competition. Cubicle-maker Herman Miller (MLKN -3.10%) managed to beat earnings estimates in its own quarterly report late last week, sending its shares soaring more than 7%. Herman Miller sports better margins and return-on-equity than Steelcase, although Steelcase has a more secure balance sheet with a lower debt-to-equity ratio than its rival. HNI (HNI -1.48%), on the other hand, missed its earnings estimates back in February.

Overall, though, stock prices throughout the industry have been doing well. As the economy recovers more quickly, especially in the housing industry, furniture companies have seen sales rise. Although office furniture isn't necessarily correlated to housing, investors seem to put Steelcase and its peers in the same category.

In its quarterly report, watch for Steelcase to discuss its Gesture line of chairs, which addresses the results of a recent study it did to see how mobile devices change sitting postures. With business customers seeking to decrease workers' compensation claims, they're often willing to pay up for the latest technology, and if Steelcase can make its case for the need for new furniture to accommodate tablets and smartphones, it could lead to new growth opportunities.

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