Why Steelcase (SCS) Stock Is Falling On Thursday

NEW YORK (TheStreet) -- Shares of Steelcase Inc. (SCS) are tanking -16.31% to $14.78 today after the company reported adjusted earnings per share of 12 cents for the first quarter of fiscal 2015, which missed the consensus estimate of 16 cents a share.

The company, a global leader in the office furniture industry, reported an 8.4% year-over-year improvement in sales to $723.1 million, falling short of analysts' estimates of $728.73 million.

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Separately, TheStreet Ratings team rates STEELCASE INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate STEELCASE INC (SCS) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, increase in stock price during the past year, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • SCS's revenue growth has slightly outpaced the industry average of 3.9%. Since the same quarter one year prior, revenues slightly increased by 8.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.42, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.17, which illustrates the ability to avoid short-term cash problems.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • STEELCASE INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, STEELCASE INC increased its bottom line by earning $0.69 versus $0.29 in the prior year. This year, the market expects an improvement in earnings ($0.96 versus $0.69).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Services & Supplies industry. The net income increased by 186.9% when compared to the same quarter one year prior, rising from -$27.50 million to $23.90 million.
  • You can view the full analysis from the report here: SCS Ratings Report
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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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