Sellers Of Herman Miller Off Steelcase Report Are Rewarded

Herman Miller, Inc. MLHR shares are trading lower by $3.15 (9.7 percent) at $29 in Thursday's session. The catalyst for the decline a Q1 earnings and sales miss. The company also announced a worse-than-expected Q2 outlook.

Although today's weakness can be explained by the report, the trading action merits a closer. The strong close on Monday, within $0.30 of the daily high at $35.26, gave investors an indication that the rally would continue.

However, that wasn't the case, as the issue shed over $3, falling to $32.15 on heavy volume.

Despite no direct news on the furniture maker, an investor or group of investors decided to hit the exit button, identifying a potential catalyst for the upcoming report. That being the subpar report of its competitor Steelcase Inc. SCS.

Steelcase reported inline earnings, but missed on revenue and provided mixed guidance. As a result, the issue fell over $1 from $13.97 to $12.86.

As it turns out, the inference drawn from the Steelcase report turned out to be a good indication for the Herman Miller report.

These correlations don't always work out so precisely, but it's certainly worth taking note of a peer's report, or the markets reaction to their reports, when evaluating how the Street will react to the upcoming report of the company you're invested in.

On a side note, Steelcase has rebounded from Tuesday's shellacking and is now trading pennies away from where it was ahead of the disappointing report.