3 Reasons SCS is Risky and 1 Stock to Buy Instead

July 24, 2025 at 00:05 AM EDT

SCS Cover Image

Over the past six months, Steelcase’s stock price fell to $10.68. Shareholders have lost 7.4% of their capital, which is disappointing considering the S&P 500 has climbed by 4.3%. This may have investors wondering how to approach the situation.

Is now the time to buy Steelcase, or should you be careful about including it in your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free.

Why Do We Think Steelcase Will Underperform?

Despite the more favorable entry price, we're cautious about Steelcase. Here are three reasons why you should be careful with SCS and a stock we'd rather own.

1. Long-Term Revenue Growth Flatter Than a Pancake

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Unfortunately, Steelcase struggled to consistently increase demand as its $3.22 billion of sales for the trailing 12 months was close to its revenue five years ago. This wasn’t a great result and is a sign of poor business quality. Steelcase Quarterly Revenue

2. EPS Growth Has Stalled

We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.

Steelcase’s EPS was flat over the last five years, just like its revenue. This performance was underwhelming across the board.

Steelcase Trailing 12-Month EPS (Non-GAAP)

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? Enter ROIC, a metric showing how much operating profit a company generates relative 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 7.1%, somewhat low compared to the best business services companies that consistently pump out 25%+.

Steelcase Trailing 12-Month Return On Invested Capital

Final Judgment

Steelcase falls short of our quality standards. Following the recent decline, the stock trades at 9.7× forward P/E (or $10.68 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 top digital advertising platform riding the creator economy.

Stocks We Like More Than Steelcase

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