Thursday, March 29, 2007

Steelcase--Part III

Headline News:

"NEW YORK (Reuters) - Steelcase Inc. (SCS), the world's biggest office furniture maker, said on Thursday quarterly earnings tripled, helped by growth in its international business.

Fourth-quarter net income rose to $29.3 million, or 20 cents a share, from $9.3 million, or 6 cents a share, a year ago.

Revenue rose 5.4 percent to $779 million.

The Grand Rapids, Michigan-based company said it expects first-quarter earnings of 15 cents to 20 cents per share including special items.

The company sees first-quarter revenue up 6 percent to 10 percent."

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Net income includes 11.6M in "ex-items" or 40% of the net income item is "stuff". You don't see that in the release, nor do you see the anomalous income tax rate.

Now, it really doesn't matter what I think. The market often does something quite different than what I think. But never buy or sell a stock off of the headline number. Read the company's release, not the headline. One of the most profitable stock purchases I ever made was BUCY. The stock was trading down, but I could see that their backlog had increased tremendously. Well as soon as the conference call started, the stock went ballistic.

SC's operating income was quite strong, but (1)in a slowing economy, (2) the juice that they've already received from international income, and (3) a resorting back to normal income tax rates, I'm guessing that they will not see these types of results in the coming year.

3 comments:

JakeGint said...

Nice comment. Doesn't hurt that office furniture is one of the first areas to get hit in recession.

The fact that it's a schitty business in the first place doesn't hurt.

JakeGint said...

Ummm... "doesn't hurt, either."

Going to have to start variegating my cliches....

Leisa said...

Jake, I'll be last person to correct your grammar--your meaning was clear.