Knoll, Inc. (KNL) just announced spectacular third-quarter earnings on Oct 16. EPS rose 41% year-over-year and the stock is still attractively priced.

Company Description

Knoll Inc, a leading designer and manufacturer of branded office furniture products and textiles, serves clients worldwide. The company focuses on innovation and modern design, yielding a comprehensive portfolio of products designed to provide enduring value and help clients shape their workplaces with imagination and vision.

The Pennsylvania-based furniture maker is involved in the green movement through organizations like the U.S. Green Building Council and is a member of the Chicago Climate Exchange. Founded in 1938, the company employs over 4,200 people and carries a market cap of $575 million.

Earnings increase 41%

On Oct 16 Knoll announced third-quarter results including a 41% year-over-year increase in earnings per share. Reported EPS were 52 cents, 11 cents higher than analyst estimates and 15 cents higher than the third quarter of 2007.

Net sales rose 11.6% year-over-year to $284 million. The increase yielded operating income of $41.1 million, a 14.5% increase from the third quarter last year.

Currently the backlog is $203 million, almost 20% higher than the 170 million recorded one year ago.

Estimates Rising

After the fourth earnings surprise in the past 4 quarters, estimates are climbing. The most recent estimate for the current year has come in 5% higher than the consensus, $1.83 compared to $1.75. The consensus estimate would yield an annual growth rate of 19%.

Attractive Valuations

Shares of KNL are currently trading around 8 times next year earnings. Knoll’s projected 5-year growth rate is currently 23%, which is fairly price. The company’s PEG ratio is 0.53, much lower than the industry average of 1.31.

The Chart

The stock sold off sharply, but saw a nice bounce heading into its earnings announcement on Oct 16. Shares were consolidating under $12, before breaking out post earnings announcement.

Content Courtesy: Zacks Investment Research

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