On 22 February 2019, Steelcase Inc. (NYSE:SCS) released its earnings update. Generally, it seems that analyst forecasts are fairly optimistic, with earnings expected to grow by 24% in the upcoming year relative to the past 5-year average growth rate of 2.2%. Presently, with latest-twelve-month earnings at US$126m, we should see this growing to US$156m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Can we expect Steelcase to keep growing?
The view from 3 analysts over the next three years is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of SCS's earnings growth over these next few years.
This results in an annual growth rate of 13% based on the most recent earnings level of US$126m to the final forecast of US$207m by 2022. This leads to an EPS of $1.73 in the final year of projections relative to the current EPS of $1.06. Margins are currently sitting at 3.7%, which is expected to expand to 5.2% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Steelcase, there are three fundamental aspects you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Steelcase worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Steelcase is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Steelcase? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.