How much will Steelcase owe in July?

Macroaxis News
  
By Achuva Shats
This post is geared to all Steelcase retail investors as well as to investors considering exiting their position in the enterprise. I will evaluate if Steelcase shares are sensibly priced going into July and whether retail investors should be worried. The firm current daily volatility is 4.96 percent, with a beta of -0.09 and alpha of 0.28 over DOW. Steelcase Piotroski F Score is 3 - Frail. We were able to break down and interpolate thirty-eight available drivers for Steelcase, which can be compared to its competition. To make sure the equity is not overpriced, please validate all Steelcase financials, including its total debt, market capitalization, and the relationship between the gross profit and short ratio . Given that Steelcase has a price to earning of 16.69 X, we advise you to double-check Steelcase current market performance to make sure the company can sustain itself down the road. Use Steelcase to protect your portfolios against small markets fluctuations. The stock experiences a somewhat bearish sentiment, but market may correct it shortly. Check odds of Steelcase to be traded at $11.7 in 30 days.
Steelcase has 733 M in debt with debt to equity (D/E) ratio of 78.6, demonstrating that Steelcase may be unable to create cash to meet all of its financial commitments. This firm has 733 M in debt with debt to equity (D/E) ratio of 78.6, demonstrating that the entity may be unable to create cash to meet all of its financial commitments. The company has a current ratio of 1.57, which is typical for the industry and considered as normal.
Steelcase financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures the total debt position of Steelcase, including all of Steelcase's outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Steelcase assets, the company is considered highly leveraged. Understanding the composition and structure of overall Steelcase debt and outstanding corporate bonds gives a good idea as to how risky the capital structure of a business and if it is worth investing in it. Please read more on our technical analysis page.
 2010 2013 2019 2020 (projected)
Receivables287.3 M390.3 M372.4 M326.06 M
Inventories137.5 M224.8 M215 M180.8 M

Understending Steelcase Total Liabilities

Steelcase liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Steelcase has to fulfill its short-term liabilities in this reporting year and should be no more than 12 months old. Long-term debt, on the other hand, is anything beyond the 12-month payment timeframe. Common short-term liabilities found on Steelcase balance sheet include debt obligations and money owed to different Steelcase vendors, workers, and loan providers. Steelcase liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Steelcase has to fulfill its short-term liabilities in this reporting year and should be no more than 12 months old. Long-term debt, on the other hand, is anything beyond the 12-month payment timeframe. Common short-term liabilities found on Steelcase balance sheet include debt obligations and money owed to different Steelcase vendors, workers, and loan providers. Below is the chart of Steelcase short long-term liabilities accounts currently reported on its balance sheet.

How important is Steelcase's Liquidity

Steelcase financial leverage refers to using borrowed capital as a funding source to finance Steelcase ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Steelcase financial leverage is typically calculated by taking the company's all of the interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. The map below shows the current breakdown between Steelcase's total debt and its cash.

How Steelcase utilizes its cash?

To perform a cash flow analysis of Steelcase, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Steelcase is receiving and how much cash it distributes out in a given period. The Steelcase cash flow statement breaks down these inflows and outflows into different buckets, which include operating activities, investing activities and financing activities. The chart below shows of Steelcase Net Cash Flow from Operations over the last 10 years
  Steelcase Operating Cash Flow

Payment of 2924 shares by Sara Armbruster of Steelcase subject to Rule 16b-3

Legal trades by Steelcase insiders are very common, as founders, directors, or employees of any publicly traded firm often have stock or stock options. These trades are made public in the United States through the filing of Form 4 of the Securities and Exchange Commission. Below entry was recorded recently and is publicly available as an insider trade:
Steelcase insider trading alert for payment of class a common stock by Sara Armbruster, VP Strategy Research and DT, on 29th of June 2020. This event was filed by Steelcase Inc with SEC on 2020-03-25. Statement of changes in beneficial ownership - SEC Form 4. Sara Armbruster is currently serves as vice president - strategy, research and new business innovation of Steelcase [view details]   
Note, although insider trading is legal, in the United States, Canada, Australia, and Germany, for mandatory reporting purposes, corporate insiders are defined as a company's officers, directors, and any beneficial owners of more than 10% of a class of the company's equity securities.

An Additional Perspective On Steelcase

Steelcase preserves 733 m of total debt. Steelcase has a beta of -0.0861. Let's try to break down what Steelcase's beta means in this case. As the market goes up, the company is expected to outperform it. However, if the market returns are negative, Steelcase will likely underperform. The beta indicator helps investors understand whether Steelcase moves in the same direction as the rest of the market, and how volatile (i.e., risky) it is compared to the market (i.e., selected benchmark). In other words, if Steelcase deviates very little from the market, it does not add much risk to the portfolio, but it also doesn't increase the expected returns. The entity reported last year revenue of 3.69 B. Total Income to common stockholders was 153.3 M with profit before taxes, overhead, and interest of 1.09 B. Steelcase Revenue Per Employee is relatively stable at the moment.

Our Steelcase analysis connotes possible reversion in July

Semi variance is down to 22.7 as of today. Steelcase exhibits above average semi-deviation of 4.76 for selected time horizon. We encourage investors to investigate Steelcase individually to make sure intended market timing strategies and available technical indicagtors are consistent with their estimates about Steelcase future systematic risk.

Our Conclusion on Steelcase

While other players in business equipment & supplies industry are either recoverring, or due for a correction, Steelcase may not be as strong as the other in terms of longer-term growth potentials. To conclude, as of 30th of June 2020, our analysis shows that Steelcase moves indifferently to market moves. The enterprise is overvalued and projects below average probability of distress for the next 2 years. Our primary 30 days buy-hold-sell recommendation on the enterprise is Strong Sell. With a less-than optimistic outlook for your 30 days horizon, it may be a good time to exit some or all of your Steelcase holdings as it seems the potential growth was already fully factored into the current price. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to Steelcase.

About Contributor

Achuva Shats is a Member of Macroaxs Editorial Board. Achuva writes about retail product and service companies from the perspective of a regular consumer and sophisticated investor at the same time. She is passionate about corporate ethics and equality in the workforce View Profile
This story should be regarded as informational only and should not be considered as solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Achuva Shats do not own shares of Steelcase. Please refer to our Terms of Use for any information regarding our disclosure principles.
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