MillerKnoll (MLKN)

Office furniture manufacturer MillerKnoll (NASDAQ:MLKN) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 10.9% year on year to $955.7 million. On the other hand, next quarter’s revenue guidance of $946 million was less impressive, coming in 1.5% below analysts’ estimates. Its non-GAAP profit of $0.45 per share was 31.1% above analysts’ consensus estimates.

Company Overview

Created through the 2021 merger of industry icons Herman Miller and Knoll, MillerKnoll (NASDAQ:MLKN) designs, manufactures, and distributes interior furnishings for offices, healthcare facilities, educational settings, and homes worldwide.

The sector faces a tepid outlook as workplace dynamics continue to evolve. Hybrid work means that enterprise demand for office furniture is lower. Consumer demand for the same products likely will not offset the loss from enterprises, as individual workers tend to have less space and need for the sector's wares. The Trump administration also possesses a high willingness to impose tariffs on key partners, which could result in retaliatory actions, all of which could pressure those selling furniture that may feature components or labor from overseas. Lastly, the COVID-19 pandemic showed that there is always a risk that something disrupts supply chains, and companies need contingency plans for this.

MillerKnoll's primary competitors in the contract furniture industry include Steelcase Inc. (NYSE:SCS), Haworth, and HNI Corporation (NYSE:HNI). In the retail home furnishings market, the company competes with Restoration Hardware (NYSE:RH), Wayfair (NYSE:W), Williams-Sonoma (NYSE:WSM), and Crate & Barrel.

Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.

With $3.76 billion in revenue over the past 12 months, MillerKnoll is a mid-sized business services company, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale. On the bright side, it can still flex high growth rates because it’s working from a smaller revenue base.

As you can see below, MillerKnoll grew its sales at an impressive 9% compounded annual growth rate over the last five years. This shows it had high demand, a useful starting point for our analysis.

Long-term growth is the most important, but within business services, a half-decade historical view may miss new innovations or demand cycles. MillerKnoll’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 2.1% over the last two years.

This quarter, MillerKnoll reported year-on-year revenue growth of 10.9%, and its $955.7 million of revenue exceeded Wall Street’s estimates by 4.9%. Company management is currently guiding for a 2.5% year-on-year decline in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 1.8% over the next 12 months. Although this projection indicates its newer products and services will catalyze better top-line performance, it is still below average for the sector.

MillerKnoll was profitable over the last five years but held back by its large cost base. Its average operating margin of 5.7% was weak for a business services business.

On the plus side, MillerKnoll’s operating margin rose by 1.9 percentage points over the last five years, as its sales growth gave it operating leverage.

In Q3, MillerKnoll generated an operating margin profit margin of 5.6%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for MillerKnoll, its EPS declined by 7.2% annually over the last five years while its revenue grew by 9%. However, its operating margin actually improved during this time, telling us that non-fundamental factors such as interest expenses and taxes affected its ultimate earnings.

Diving into the nuances of MillerKnoll’s earnings can give us a better understanding of its performance. A five-year view shows MillerKnoll has diluted its shareholders, growing its share count by 17.3%. This dilution overshadowed its increased operational efficiency and has led to lower per share earnings. Taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For MillerKnoll, its two-year annual EPS growth of 7.1% was higher than its five-year trend. Accelerating earnings growth is almost always an encouraging data point.

In Q3, MillerKnoll reported adjusted EPS of $0.45, up from $0.36 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects MillerKnoll’s full-year EPS of $2.04 to shrink by 3.4%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

MillerKnoll has shown weak cash profitability over the last five years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 3%, subpar for a business services business.

Taking a step back, we can see that MillerKnoll’s margin dropped by 5.5 percentage points during that time. This along with its unexciting margin put the company in a tough spot, and shareholders are likely hoping it can reverse course. If the trend continues, it could signal it’s becoming a more capital-intensive business.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

MillerKnoll historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 8.1%, somewhat low compared to the best business services companies that consistently pump out 25%+.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, MillerKnoll’s ROIC has stayed the same over the last few years. If the company wants to become an investable business, it must improve its returns by generating more profitable growth.

MillerKnoll reported $167.2 million of cash and $1.83 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $369.3 million of EBITDA over the last 12 months, we view MillerKnoll’s 4.5× net-debt-to-EBITDA ratio as safe. We also see its $67.6 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was good to see MillerKnoll beat analysts’ EPS expectations this quarter. We were also glad its revenue outperformed Wall Street’s estimates. On the other hand, its revenue guidance for next quarter missed and its EPS guidance for next quarter fell slightly short of Wall Street’s estimates. Overall, this print was mixed. The stock traded up 1.2% to $19.18 immediately following the results.

Updated: December 3, 2025 at 10:31 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in MillerKnoll.

We see the value of companies helping their customers, but in the case of MillerKnoll, we’re out. Although its revenue growth was impressive over the last five years, it’s expected to deteriorate over the next 12 months and its projected EPS for the next year is lacking. And while the company’s expanding operating margin shows the business has become more efficient, the downside is its declining EPS over the last five years makes it a less attractive asset to the public markets.

MillerKnoll’s P/E ratio based on the next 12 months is 8.2x. While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $35 on the company (compared to the current share price of $15.93).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.