Amazon CEO Andy Jassy recently told employees they needed to be working in the office at least three days a week, or, in his words, “it’s probably not going to work out for you at Amazon.” These were strong words from the nation's second largest employer, and a clear sign that employer tolerance of the work from home trend is shifting.
One stock that should benefit from this shifting trend is Steelcase (SCS). Steelcase designs and manufactures office furniture, with 40% of revenue coming from education, healthcare, and small and medium businesses.
Right now 55% of employees in the United States work three or more days a week in the office. But, while that number continues to grow, per the comments from the Amazon CEO above, that still leaves a large number at home.
Steelcase works with employers to design office space to encourage workers to want to spend more time in the office. That means retooling office space into what Steelcase calls a hybrid community, welcoming to onsight workers, but built to facilitate efficient teamwork with offsite colleagues as well.
They do this by combining over a hundred years of design experience, SCS was founded in 1912, with some well known names in the design and fashion world. Who doesn’t want to go to work to sit in their Frank Lloyd Wright inspired chair, or hold a meeting perched on their West Elm couch? Steelcase partners with these entities, as well as several others.
As you know my favorite POWR Rating factor to look at is value. Steelcase has a B Value rating, and ranks ahead of 94.9% of value stocks we look at in the U.S.
SCS pays a 4.3% dividend, trades at just 10.3x projected earnings, and at only 0.3x sales. While the company took a hit the past few years in earnings growth courtesy of the pandemic, SCS has come roaring back in 2023, clocking EBITDA growth of over 82%.
With an overall POWR Rating of B, Steelcase should continue to gain ground as the back to work trend accelerates and employers search for incentives to lure back reluctant employees.
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SCS shares were unchanged in after-hours trading Friday. Year-to-date, SCS has gained 22.92%, versus a 17.38% rise in the benchmark S&P 500 index during the same period.
About the Author: Jay Soloff
Jay is the lead Options Portfolio Manager at Investors Alley. He is the editor of Options Floor Trader PRO, an investment advisory bringing you professional options trading strategies. Jay was formerly a professional options market maker on the floor of the CBOE and has been trading options for over two decades.
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