February 20, 2013 08:00 ET

Business Equipment Stocks Pick Up the Momentum

The Provides Stock Research on Diebold Inc. and Steelcase Inc.

NEW YORK, NY--(Marketwire - Feb 20, 2013) -  With the general business activity picking up, the demand for business products is also expected to be revived. The impact will be positive for the companies operating in this space. Diebold Incorporated (NYSE: DBD) announced healthy numbers for its fourth quarter, despite failing to meet EPS expectations. The stock saw a downturn last year but is expected to resume its upward movement on account of improved demand. Another major player, Steelcase Inc. (NYSE: SCS) offers good dividend along with capital appreciation. The stock offers long term investment opportunity.

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Diebold reported its fourth quarter results and while it met revenue expectations, it lagged behind EPS estimates. The company's revenue stood at $840.1 million and its EPS was reported at 45 cents per share. Diebold also saw its margins deteriorating. The company restructured its management as its CEO was changed. Tom Swidarski was let go after a 17-year long collaboration. The announcement did not prove to be positive for the stock as it tumbled down in the market. Diebold is having second thoughts about its projects as well as the company suspended plans for its new headquarters.

Diebold's stock is down 21 percent in the past 12 months. However, it does offer about 4 percent dividend yield. The company recently announced 28.75 cents per share dividend, up one percent. It was also the consecutive 60th annual dividend increase for the company. While its dividend seems like a safe bet due to its long history, the recent deterioration in its stock price is a cause of concern.

Diebold has a good work pipeline and is likely to improve its revenue in the coming quarter. It also expects its international business to fare better than the domestic segment. Diebold's stock has performed poorly in the recent past but may recover to some extent.

Elsewhere in the industry, Steelcase reported $719.4 million in revenue for its fiscal third quarter of the year. It also announced its EPS at 22 cents per share. The company also provided a bright outlook for the fourth quarter. It also maintained its robust margins, indicating good potential for growth. Steelcase's stock offered 45 percent growth in the past 52 weeks, coupled with 2.6 percent dividend growth. However, going forward, the company faces some challenges as well. The stock currently sells at Price/Earnings ratio of 22.05, which makes it an inexpensive stock to own.

Steelcase performed consistently well last year and its earnings followed its growth path. The company still presents a compelling investment opportunity despite the steep run up in its stock price. Steelcase features healthy margins, providing it a good cushion against any drop in demand. The company also has seasonal demand pattern which may affect its performance in certain quarters.

The company specializes in office furniture systems. It is mainly operational in the U.S. but also has some presence internationally. Steelcase is focusing on its emerging markets in order to make up for the slack demand in its domestic market. The stock provided good return and is expected to keep performing well. 

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