Grand Rapids based Steelcase (SCS) missed numbers, essentially guiding the office products subsector lower today, and shareholders are feeling it with a 20% pullback. Is this a signal the entire market has turned for this subsector?I think the answer to that question is a resounding YES!
It must be said that Amazon (AMZN) is crushing everyone, but it is likely to be a slow death as shorting and industry consolidation will take place in 2016.Thus, I fully expect Steelcase to re-test the $11- 12 area. I also see other players in the sector declining more.I see Steelcase being purchased when (and if) it pulls back to attractive levels—where managers will start picking away at it and socking away shares.I know I would, and I've traded SCS previously and done well with it. It was an incredible value a few years ago making many PM's happy.
Steelcase Inc. designs, manufactures, and distributes an integrated portfolio of furniture settings, user-centered technologies, and interior architectural products. The company operates through Americas, EMEA, and Other Category segments. Its furniture systems portfolio comprises panel-based and freestanding furniture systems; and complementary products, such as storage, tables, and ergonomic worktools.
"The Americas improved profitability in the third quarter despite slowing top line growth, and that helped to offset deeper losses than we expected in EMEA, as we continue to work through our major restructuring actions," said Jim Keane, president and CEO. "EMEA orders grew 20 percent organically in the quarter, driven by improved economies in Western Europe and strong demand for some of our new products. Asia Pacific posted record profitability for the quarter compared to a loss in the prior year."
Steelcase distributes its products and services through a network of independent and company-owned dealers, as well as directly to end-use customers.Expect Keane to address issues associated with a declining market share, and solutions to improving margins—good CEOs have this ability.My suggestion is to listen carefully to his early 2016 quarterly calls. Value appears for this stock just a few clicks lower from here, so it is worth watching as consolidation will occur in this industry and great managers will rise to the top.
DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer