Office furniture maker Steelcase’s (SCS) shares are trading below their 50-day and 200-day moving averages. Furthermore, the stock tumbled in price on the company’s recent quarterly numbers, which missed consensus estimates. According to SCS, supply chain issues and inflationary pressures have hindered its performance. So, because SCS’ operational headwinds are expected to remain in the current quarter due to COVID-19 omicron-variant-related uncertainties, is SCS a buy now? Read on. Steelcase Inc . (NYSE:SCS) in Grand Rapids, Mich., manufactures and sells integrated furniture settings, user-centered technologies, and interior architectural products in the United States and internationally. The stock has slumped 15.6% in price over the past year and 18% year-to-date to close its last trading session at $11.11. The stock is currently trading below its 50-day and 200-day moving averages.
The office furniture maker’s shares tumbled after the company reported lower than expected third-quarter top- and bottom lines on December 16. SCS’ shares fell 3.5% intraday in Friday’s trading session. The company’s revenue came in at $738.20 million, versus a $767.63 million consensus estimate. Also, its adjusted EPS came in at $0.08, missing analysts’ estimates by 11.1%. The company cited several supply chain disruptions, inflationary pressures, and higher costs associated with supply chain disruptions that have negatively impacted its growth trajectory over the quarter. SCS also noted that its earnings could “have been approximately three times higher this quarter” if the company had not dealt with these operational challenges. SCS expects its fourth-quarter revenue to be within $740 - $765 million, translating to 9 - 13% year-over-year growth. It expects its earnings per share for the quarter to be approximately breakeven. But its supply chain issues, and inflation are expected to continue through the quarter.
However, SCS is optimistic about its long-term growth. In addition, because companies worldwide are transitioning to hybrid work structures and bringing employees back to offices, requiring changes and re-equipment in those offices, SCS expects the shift to provide immense opportunities. However, the newly identified COVID-19 omicron variant is hampering companies’ office return plans. Surging omicron cases have compelled companies to keep their return-to-office plans on hold, and if the variant continues to spread, SCS’ near-term growth expectations could be hindered.