Considering the positive surprises in the trailing four quarters, an earnings beat is very much in the cards
Analysts have given the company’s stock a buy rating, with a price target of $40. Being on a recovery path, with a price that is still below the long-term average, the stock is an investment option worth considering. Also, lower debt and a reasonably good return on equity make it appealing.
Also see: Herman Miller Q2 2019 Earnings Conference Call Transcript
Meanwhile, it needs to be seen as to what extent the management will be able to take forward the expansion activities without external funding. Also, the deceleration in earnings growth over the years could be a dampener as far as investor sentiment is concerned. Last year, Herman Miller’s profit gained at a pace that is slower than its five-year average growth rate, indicating that the slowdown might continue in the coming quarters.
For the second quarter, the Zeeland, Michigan-based company reported record sales of $653 million, up 8%, supported by a 10% organic order growth. Consequently, adjusted earnings surged 32% annually to $0.75 per share.
Herman Miller shares have maintained a steady uptrend after slipping to an eight-month low towards the end of last year. The stock gained about 18% since the beginning of the year and moved up 17% in the past twelve months.