A couple of questions for those who have followed this industry for awhile. Is high 20's the traditional limit for P/E's in this industry? Steelcase and Herman Miller have similar PE's (for obvious reasons), is this the industry standard for this ratio. Also, which company is the better short and long term investment? Is there a message board for SCS? How can one be started? Please forgive my ignorance, as I am a novice.
The industry has been ranging between high teens and high twenties for two years, I don't think any of the big players have been above 30. Prior to that it was in the teens. This industry is cyclical, based largely on how the economy is doing. My source for info has been The Monday Morning Quarterback (www.mmbq.com), a contract furniture industry newsletter. For short and long term prospects you should consider Steelcases' size, about twice Herman's, and consider that Steelcase is new to being public and probably has more potential to be squeezed out of it like Herman has done over the last few years. There is also a trend to supply flooring, walls, and ceiling along with your furniture which allows the furniture makers, both SCS and MLHR to grab more of the office construction/outfitting dollars.
Want to suggest another (and better) source for industry news-- Office Insight. It too is a weekly, faxed newsletter (like MMQB) but offers more insightful analysis of industry events and news, along with the added perspectives of the architecture, interior design, and independant dealer professions. MMQB largely regurgitates the press releases of major manufacturers and offers little else. You can call OI for subscription information, and can probably get a few trial issues if you ask (203 656 4100). By the way, I have no interest in OI, other than encouraging better journalism within our industry. Check them out.
Regarding Anteater's suggestion that the industry is largely cyclical, a closer look at the data suggests otherwise. In the last thirty years the industry (BIFMA, or, Business and Institutional Furniture Manufacturers Association 616 285 3963) has only reported two years of sales declines, despite much more pronounced swings in the broader economy. Granted, sales growth has been modest at times, but have trended ever higher due to the continued increase in white collar workers and the application of technology in the workplace. It should also be noted that these gains have largely accrued to the major players in the industry, due to the strength of their distribution networks, breadth of product offering, etc.
As for the future, still looks promising given these same trends and the strength of the economic expansion.
Heman has been a public company for quite a few years. Steelcase that has gone public in the last month did so but only represents 20 percent of the company. There are many owners in the Steelcase family, and those owners that are trying to protect their money and those that will tend to inherit (kids and grandkids) of those owners went public for the large part for tax purposes......
The results from the IPO which I think was around 345 million went to charities..........tax deductions.........
Aside from that SCS, MLHR, and HON and Kimball and Knoll are basically good companies competing with each other.
Big show happening in June (neocon) at the Merchandise Mart in Chicago. miller, haworth,steelcase, Allsteel (HON) have all shut down for the last month in order to get ready for the show. Most have gutted their showrooms in the process of preparing to show off the new and existing products.
If you look at the list of office furniture makers, the leaders (scs, mlhr, hon, kimball are all relatively equal to each other in price.
actually in todays cut throat business sometimes its not even about selling furniture, as compared to what you have to offer in product quality, leadtimes, deliveries, and who can best fulfill the need of the client, and not necessarily who can do it the cheapest.