Assessing Steelcase Inc.’s (NYSE:SCS) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess SCS’s recent performance announced on 23 November 2018 and evaluate these figures to its long-term trend and industry movements.
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Was SCS’s recent earnings decline worse than the long-term trend and the industry?
SCS’s trailing twelve-month earnings (from 23 November 2018) of US$103m has declined by -3.1% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 5.4%, indicating the rate at which SCS is growing has slowed down. Why could this be happening? Well, let’s look at what’s transpiring with margins and if the whole industry is experiencing the hit as well.
In terms of returns from investment, Steelcase has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. Furthermore, its return on assets (ROA) of 6.0% is below the US Commercial Services industry of 7.5%, indicating Steelcase’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Steelcase’s debt level, has declined over the past 3 years from 17% to 13%.
What does this mean?
Steelcase’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors affecting its business. You should continue to research Steelcase to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for SCS’s future growth? Take a look at our free research report of analyst consensus for SCS’s outlook.
- Financial Health: Are SCS’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 23 November 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.