Categories Analysis, Consumer, Earnings

Earnings preview: What to expect from Steelcase Q1 2020 results?

Steelcase Inc. (NYSE: SCS) is scheduled to report its first quarter of fiscal 2020 on Wednesday after the market closes. The interior furniture architectural maker’s results will be driven by all segments growth backed by strong project business from large customers. Also, growth across all segments are likely to drive orders higher.

The company is expected to deliver strong organic revenue growth for the fourth successive time. This is likely to come from the launch of new products, acquisitions, and the strengthening of its portfolio through partnerships with companies such as West Elm and Moooi.

The gross margins are anticipated to fall for the first quarter due to unfavorable business mix and higher overhead investments to support growth. This is likely to be offset by higher volume and cost reduction initiatives. Benefits from pricing actions will offset higher commodity, freight, and labor costs in the quarter.

Steelcase furniture maker
Image Courtesy: Steelcase / Facebook post

Analysts expect the company’s earnings to jump by 28.60% to $0.18 per share and revenue will climb by 11.30% to $839.07 million for the first quarter. In comparison, during the previous year quarter, Steelcase reported a profit of $0.14 per share on revenue of $754 million.

The company has surprised investors by beating analysts’ expectations thrice in the past four quarters. It is expected that Steelcase will post upbeat results for the first quarter. Majority of the analysts recommended a “hold” rating while expecting the stock to reach $18.67 per share for the next 52 weeks.

For the fourth quarter, Steelcase reported a profit compared to breakeven last year as strong project business from large customers drove all the segments to double-digit growth. This has aided in an 18% growth in the revenue. Orders increased by 5% on growth across all segments.

Also read: Earnings to watch for this week

For the first quarter of 2020, the company expects revenue in the range of $830 million to $855 million and diluted earnings in the range of $0.16 to $0.20 per share. Adjusted for the impact of acquisitions and unfavorable currency translation effects, the projected revenue range translates to the expected organic growth of 7% to 10%.

For fiscal 2020, earnings are anticipated to be in the range of $1.20 to $1.35 per share and revenue growth outlook is set in the range of 5.5% to 9.5%. Organic revenue growth is predicted to be in the range of 2% to 6% for the year.

Shares of Steelcase opened higher on Monday and is trading in the green territory on the NYSE. The stock has risen over 16% in the past year and over 19% in the year so far.

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