The Key to Growth for Herman Miller Earnings
Herman Miller will release its quarterly report on Wednesday, but investors haven't been too sure of the company's likely future direction. The stock has done well so far this year, but has come off its recent highs, and Herman Miller earnings are expected to come in flat from year-ago levels.
Herman Miller specializes in office furniture, with its Aeron chair being a longtime standard of ergonomic design. As businesses cut back on spending during and after the financial crisis, the business-equipment maker went through relatively tough times. As corporate America starts to bounce back more convincingly, though, will customers start spending on Herman Miller's products again? Let's take an early look at what's been happening with Herman Miller over the past quarter, and what we're likely to see in its report.
Stats on Herman Miller
Analyst EPS Estimate
Change From Year-Ago EPS
Change From Year-Ago Revenue
Earnings Beats in Past 4 Quarters
Source: Yahoo! Finance.
Can Herman Miller earnings keep moving higher this quarter?
Analysts have marked down their expectations for Herman Miller earnings in recent months, cutting $0.08 per share from their August-quarter estimates, and a similar amount from their full-year fiscal 2014 projections. The stock has largely been stuck in a holding pattern, having fallen 6% since mid-June, and consolidating gains from earlier in the year.
One reason for Herman Miller's recent struggles became apparent in its May-quarter report, in which the company reported sharply higher earnings on a 9.3% jump in quarterly revenue. But looking forward, the company's guidance fell well short of what investors had hoped to see. CEO Brian Walker specifically mentioned sequestration as holding back government spending, and contributing to sluggishness in the industry.
Still, improvements in economic conditions should help Herman Miller's business going forward. After plunging in late 2008 and early 2009, business-spending levels have risen to new highs recently, suggesting that companies are making long-delayed capital expenditures. Rival HNI , which makes fireplace products as well as office furniture, has been more optimistic about prospects for the industry. HNI has the advantage of exposure to the housing market through its hearth-products segment, but even though cutbacks in government spending have offset some private-sector gains, macroeconomic factors could start working in Herman Miller's favor.
Another potential threat comes from competitor innovation. Steelcase recently came out with its Gesture chair, which offers ergonomically appealing functionality for an array of different activities, including typing, presenting via tablet, or using other devices. As technology continues to advance, Herman Miller needs to make sure it doesn't fall behind the rest of its industry peers.
In the Herman Miller earnings report, watch to see how the company expects to launch new products in the future. Continuing to produce the same quality products that built its reputation in the first place will be crucial in Herman Miller's effort to continue its track record of success.
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The article The Key to Growth for Herman Miller Earnings originally appeared on Fool.com.Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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