Although the S&P 500 is down 2.4% over the past six months, Steelcase’s stock price has fallen further to $10.82, losing shareholders 19.1% of their capital. This might have investors contemplating their next move.
Is there a buying opportunity in Steelcase, or does it present a risk to your portfolio? Get the full stock story straight from our expert analysts, it’s free.
Why Do We Think Steelcase Will Underperform?
Even though the stock has become cheaper, we're swiping left on Steelcase for now. Here are three reasons why there are better opportunities than SCS and a stock we'd rather own.
1. Revenue Spiraling Downwards
A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Steelcase’s demand was weak over the last five years as its sales fell at a 3.2% annual rate. This wasn’t a great result and signals it’s a low quality business. 
2. EPS Trending Down
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Sadly for Steelcase, its EPS declined by 5.8% annually over the last five years, more than its revenue. This tells us the company struggled because its fixed cost base made it difficult to adjust to shrinking demand.
3. Previous Growth Initiatives Haven’t Impressed
Growth gives us insight into a company’s long-term potential, but how capital-efficient was that growth? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).
Steelcase historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 6.4%, somewhat low compared to the best business services companies that consistently pump out 25%+.
Final Judgment
Steelcase doesn’t pass our quality test. Following the recent decline, the stock trades at 9.9× forward P/E (or $10.82 per share). While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are better stocks to buy right now. We’d suggest looking at a safe-and-steady industrials business benefiting from an upgrade cycle.
Stocks We Like More Than Steelcase
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
