By Rob Otman
Herman Miller (Nasdaq: MLHR) is a $3 billion company today. Investors that bought shares one year ago are sitting on a 2.9% total return. That’s below the S&P 500’s return of 19.59%.
Herman Miller stock is underperforming the market. It’s beaten down, but it reports earnings soon. So is it a good time to buy? To answer this question, we’ve turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
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✗ Earnings-per-Share (EPS) Growth: Herman Miller reported a recent EPS growth rate of -9.84%. That’s below the commercial services and supplies industry average of 20.8%. That’s not a good sign. We like to see companies that have higher earnings growth.
✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the commercial services and supplies industry is 31.44. And Herman Miller’s ratio comes in at 16.14. It’s trading at a better value than many of its competitors.
✓ Debt-to-Equity: The debt-to-equity ratio for Herman Miller stock is 32.26%. That’s below the commercial services and supplies industry average of 161.07%. The company is less leveraged.
✓ Free Cash Flow per Share Growth: Herman Miller’s FCF has been higher than that of its competitors over the last year. That’s good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.
✗ Profit Margins: The profit margin of Herman Miller comes in at 5.7% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Herman Miller’s profit margin is below the commercial services and supplies average of 10.23%. So that’s a negative indicator for investors.
✓ Return on Equity: Return on equity tells us how much profit a company produces with the money shareholders invest. The ROE for Herman Miller is 20.86%, and that’s above its industry average ROE of 15.1%.
Herman Miller stock passes four of our six key metrics today. That’s why our Investment U Stock Grader rates it as a Buy With Caution.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth.
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Source:: Investment You
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