When a management team decides to invest in product development and sale and marketing initiatives it is intended to help overall revenues in the future, but this long term vision at times mutes near term earnings. This is the situation facing our Zacks Bear of the Day, Steelcase Inc. (SCS - Free Report) .
This Zacks Rank #5 (Strong Sell) company is a designer and manufacturer of products used to create high-performance work environments. Its product portfolio includes furniture systems, seating, storage, desks, casegoods, interior architectural products, technology products and related products and services. The company reports two geographic furniture segments: North America and International.
Recent Earnings Results
Management posted Q1 18 earnings on June 21 where they missed both the Zacks consensus earnings and revenue estimates. In their America’s segment, they saw year over year changes in revenues -2.8%, orders -3%, and SG&A as a percentage of sales increased from +24.7% to +26.2%. Management cited “increased investment in product development and sales & marketing” as the cause of the increased costs. In their EMEA (Europe, Middle East and Africa) segment year over year revenues dropped by -9.7%, and posted a normalized operating loss of -$8.6 million.
Management’s Take
According to Jim Keane, president and CEO, “Our industry is changing as customers begin to adopt dramatically different spaces that support new ways of working," said Jim Keane. "We expect to increase our investments in new products and partnerships relevant to their emerging needs. These investments are intended to help us broaden our addressable market and create new growth opportunities for the future. The success of the products we launched in recent years, and the awards and other recognition we earned at the Neocon trade show give us confidence that customers and influencers agree we are on the right track.”
Price and Earnings Consensus Graph
Due to the poor earnings report, not so strong guidance, and increased expenses the stock price and future earnings estimates have both declined.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
When a management team decides to invest in product development and sale and marketing initiatives it is intended to help overall revenues in the future, but this long term vision at times mutes near term earnings. This is the situation facing our Zacks Bear of the Day, Steelcase Inc. (SCS - Free Report) .
This Zacks Rank #5 (Strong Sell) company is a designer and manufacturer of products used to create high-performance work environments. Its product portfolio includes furniture systems, seating, storage, desks, casegoods, interior architectural products, technology products and related products and services. The company reports two geographic furniture segments: North America and International.
Recent Earnings Results
Management posted Q1 18 earnings on June 21 where they missed both the Zacks consensus earnings and revenue estimates. In their America’s segment, they saw year over year changes in revenues -2.8%, orders -3%, and SG&A as a percentage of sales increased from +24.7% to +26.2%. Management cited “increased investment in product development and sales & marketing” as the cause of the increased costs. In their EMEA (Europe, Middle East and Africa) segment year over year revenues dropped by -9.7%, and posted a normalized operating loss of -$8.6 million.
Management’s Take
According to Jim Keane, president and CEO, “Our industry is changing as customers begin to adopt dramatically different spaces that support new ways of working," said Jim Keane. "We expect to increase our investments in new products and partnerships relevant to their emerging needs. These investments are intended to help us broaden our addressable market and create new growth opportunities for the future. The success of the products we launched in recent years, and the awards and other recognition we earned at the Neocon trade show give us confidence that customers and influencers agree we are on the right track.”
Price and Earnings Consensus Graph
Due to the poor earnings report, not so strong guidance, and increased expenses the stock price and future earnings estimates have both declined.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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