Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Herman Miller, Inc. stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Herman Miller has a trailing twelve months PE ratio of 14.96, as you can see in the chart below:
![](https://staticx-tuner.zacks.com/images/zadmin_tuner_image/mlhr.jpg)
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 18.22. If we focus on the long-term PE trend, Herman Miller’s current PE level puts it below its midpoint over the past five years.
![](https://staticx-tuner.zacks.com/images/zadmin_tuner_image/mlhrsp.jpg)
Further, the stock’s PE compares favorably with the Zacks Business Services sector’s trailing twelve months PE ratio, which stands at 29.36. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
![](https://staticx-tuner.zacks.com/images/zadmin_tuner_image/mlhrsec.jpg)
We should also point out that Herman Miller has a forward PE ratio (price relative to this year’s earnings) of just 13.59, so it is fair to say that a slightly more value-oriented path may be ahead for Herman Miller stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Herman Miller has a P/S ratio of about 1.01. This is lower than the S&P 500 average, which comes in at 3.30 right now. Also, as we can see in the chart below, this is below the highs for this stock in particular over the past few years.
![](https://staticx-tuner.zacks.com/images/zadmin_tuner_image/mlhrps.jpg)
If anything, MLHR is in the higher end of its range in the time period from a P/S metric, suggesting some level of overvalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Herman Miller currently has a Zacks Value Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Herman Miller a solid choice for value investors.
What About the Stock Overall?
Though Herman Miller might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth Score of A and a Momentum Score of A. This gives MLHR a Zacks VGM score — or its overarching fundamental grade — of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current year has seen one estimate go higher in the past sixty days compared to no movement in the opposite direction, while the full year 2020 estimate has seen one upward revision compared to no downward in the same time period.
This has had a positive impact on the consensus estimate though as the current year consensus estimate has inched up by 1.2% in the past two months, while the full year 2020 estimate has risen by 1.9%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This bullish trend is why the stock boasts a Zacks Rank #2 (Buy) and why we are expecting outperformance from the company in the near term.
Bottom Line
Herman Miller is an inspired choice for value investors, as it is hard to beat its incredible line up of statistics on this front. A strong industry rank (among top 41% of more than 250 industries) and a Zacks Rank #2 further instils our confidence.
However, over the past two years, the Zacks Business - Office Products industry has clearly underperformed the market at large, as you can see below:
![](https://staticx-tuner.zacks.com/images/zadmin_tuner_image/mlhrpp.jpg)
So, value investors might want to wait for industry trends to turn favorable in this name first, but once that happens, this stock could be a compelling pick.
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Image: Bigstock
Is Herman Miller (MLHR) a Great Pick for Value Investors Now?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Herman Miller, Inc. stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Herman Miller has a trailing twelve months PE ratio of 14.96, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 18.22. If we focus on the long-term PE trend, Herman Miller’s current PE level puts it below its midpoint over the past five years.
Further, the stock’s PE compares favorably with the Zacks Business Services sector’s trailing twelve months PE ratio, which stands at 29.36. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Herman Miller has a forward PE ratio (price relative to this year’s earnings) of just 13.59, so it is fair to say that a slightly more value-oriented path may be ahead for Herman Miller stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Herman Miller has a P/S ratio of about 1.01. This is lower than the S&P 500 average, which comes in at 3.30 right now. Also, as we can see in the chart below, this is below the highs for this stock in particular over the past few years.
If anything, MLHR is in the higher end of its range in the time period from a P/S metric, suggesting some level of overvalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Herman Miller currently has a Zacks Value Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Herman Miller a solid choice for value investors.
What About the Stock Overall?
Though Herman Miller might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth Score of A and a Momentum Score of A. This gives MLHR a Zacks VGM score — or its overarching fundamental grade — of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current year has seen one estimate go higher in the past sixty days compared to no movement in the opposite direction, while the full year 2020 estimate has seen one upward revision compared to no downward in the same time period.
This has had a positive impact on the consensus estimate though as the current year consensus estimate has inched up by 1.2% in the past two months, while the full year 2020 estimate has risen by 1.9%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Herman Miller, Inc. Price and Consensus
Herman Miller, Inc. price-consensus-chart | Herman Miller, Inc. Quote
This bullish trend is why the stock boasts a Zacks Rank #2 (Buy) and why we are expecting outperformance from the company in the near term.
Bottom Line
Herman Miller is an inspired choice for value investors, as it is hard to beat its incredible line up of statistics on this front. A strong industry rank (among top 41% of more than 250 industries) and a Zacks Rank #2 further instils our confidence.
However, over the past two years, the Zacks Business - Office Products industry has clearly underperformed the market at large, as you can see below:
So, value investors might want to wait for industry trends to turn favorable in this name first, but once that happens, this stock could be a compelling pick.
This Could Be the Fastest Way to Grow Wealth in 2019
Research indicates one sector is poised to deliver a crop of the best-performing stocks you'll find anywhere in the market. Breaking news in this space frequently creates quick double- and triple-digit profit opportunities.
These companies are changing the world – and owning their stocks could transform your portfolio in 2019 and beyond. Recent trades from this sector have generated +98%, +119% and +164% gains in as little as 1 month.
Click here to see these breakthrough stocks now >>