Contrasting Herman Miller (MLHR) and HNI (HNI)

Herman Miller (NASDAQ: MLHR) and HNI (NYSE:HNI) are both small-cap business services companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, risk, institutional ownership, profitability, earnings, dividends and valuation.

Analyst Ratings

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This is a breakdown of recent ratings and target prices for Herman Miller and HNI, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Herman Miller 0 0 2 0 3.00
HNI 0 3 1 0 2.25

Herman Miller presently has a consensus price target of $40.50, indicating a potential upside of 31.92%. HNI has a consensus price target of $42.00, indicating a potential upside of 20.97%. Given Herman Miller’s stronger consensus rating and higher possible upside, equities analysts plainly believe Herman Miller is more favorable than HNI.

Risk and Volatility

Herman Miller has a beta of 1.41, suggesting that its stock price is 41% more volatile than the S&P 500. Comparatively, HNI has a beta of 1.42, suggesting that its stock price is 42% more volatile than the S&P 500.

Profitability

This table compares Herman Miller and HNI’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Herman Miller 5.55% 22.26% 10.20%
HNI 4.13% 17.64% 6.38%

Earnings & Valuation

This table compares Herman Miller and HNI’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Herman Miller $2.28 billion 0.80 $123.90 million $2.14 14.35
HNI $2.18 billion 0.69 $89.79 million $2.03 17.10

Herman Miller has higher revenue and earnings than HNI. Herman Miller is trading at a lower price-to-earnings ratio than HNI, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

82.6% of Herman Miller shares are owned by institutional investors. Comparatively, 72.8% of HNI shares are owned by institutional investors. 1.9% of Herman Miller shares are owned by company insiders. Comparatively, 5.2% of HNI shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Herman Miller pays an annual dividend of $0.72 per share and has a dividend yield of 2.3%. HNI pays an annual dividend of $1.14 per share and has a dividend yield of 3.3%. Herman Miller pays out 33.6% of its earnings in the form of a dividend. HNI pays out 56.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Herman Miller has raised its dividend for 6 consecutive years.

Summary

Herman Miller beats HNI on 13 of the 17 factors compared between the two stocks.

About Herman Miller

Herman Miller, Inc. is engaged in the research, design, manufacture, sale and distribution of office furniture systems, seating products, home furnishings and related services, among others. The Company’s segments include North American Furniture Solutions, which includes the design, manufacture and sale of furniture products for work-related settings, including office, education and healthcare environments, across the United States and Canada; EMEA, Latin America, and Asia Pacific (ELA) Furniture Solutions, which includes the operations associated with the design, manufacture, and sale of furniture products, primarily for work-related settings, in the Europe, Middle East and Africa (EMEA), Latin America and Asia-Pacific geographic regions, among others; Specialty segment, which includes the design, manufacture and sale of furniture products and textiles, and Consumer segment, which includes the sale of modern design furnishings and accessories to third-party retail distributors.

About HNI

HNI Corporation is a provider of office furniture and hearth products. The Company’s office furniture products include panel-based and freestanding furniture systems, seating, storage and tables. The Company’s segments include office furniture and hearth products. The office furniture segment manufactures and markets a line of metal and wood commercial and home office furniture, which includes storage products, desks, credenzas, chairs, tables, bookcases, freestanding office partitions, and panel systems and other related products. The hearth products segment manufactures and markets a line of gas, electric, wood and biomass burning fireplaces, inserts, stoves, facings and accessories, principally for the home. It offers hearth products under various brands, such as Heatilator, Heat & Glo, Majestic, Monessen, Quadra-Fire, Harman Stove, Vermont Castings and PelPro. Its office furniture products are sold under various brands, such as HON, OFM, basyx by HON, Lamex and ERGO.

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