Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Steelcase Inc. provides a portfolio of furniture, architectural and technology products. The Company, through its brands Steelcase, Designtex, Coalesse, AMQ, Smith System, Orangebox, and Viccarbe, offers a comprehensive portfolio of furniture and architectural products and services designed to help customers create workplaces. Its furniture portfolio includes furniture systems, seating, storage, fixed and height-adjustable desks, benches and tables and complementary products such as work accessories, lighting, mobile power and screens.

1.2 The Key Positives, Negatives, and Investment summary

1.3 Key Metrics:

SCS has efficiently used its assets and paid down obligations in comparison to its peer maintaining a healthy liquidity position. Additionally, quarterly improvements and operational efficiency helped the company to have lower balance sheet risk as compared to the industry median both of which depict the company’s ability to efficiently use its resources and stay competitive in the industry.

1.4 Top 10 shareholders:

The top 10 shareholders together form ~55.65% of the total shareholding, signifying concentrated shareholding. Pzena Investment Management, LLC and The Vanguard Group, Inc, Ltd are the biggest shareholders, holding the maximum stake in the company at ~10.08% and ~8.18%, respectively.

1.5 Consistent dividend History

SCS has been paying a dividend since 1998. The company was having a track record of consistent dividend payments with a current dividend yield of 5.67% higher than the US treasury yield. Recently, on September 21, 2022, SCS announced a quarterly dividend on the common stock of USD 0.10 per share, to be paid in Q3 2023.

SCS's Dividend Chart; Source: REFINITIV; Analysis by Kalkine Group

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates:

The below picture gives an overview of the recent updates:

2.2 Insights of Q2FY23:

Section 3: Key Risks

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

4.2 Fundamental Valuation

Valuation Methodology: EV/Sales Multiple-Based Relative Valuation

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is October 25, 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

 Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

 Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.

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