What happened

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Shares ofKnoll Inc.(NYSE: KNL) lost 14.2% today, after the furniture-and-textile maker posted a disappointing earnings report on Friday afternoon.

So what

Knoll’s bottom-line result matched analyst expectations as adjusted profit per share improved from $0.43 a year ago to $0.44. However, revenue took a surprising fall, as sales slipped 4.2% to $292.9 million, well below the analyst consensus at $313.6 million. CEO Andrew Cogan said the company had a strong year overall but noted an industrywide slowdown in the fourth quarter. Still, he said he expected demand to return now that the uncertainty of the election season has passed.

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Image source: Knoll.

Now what

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Knoll didn’t issue guidance for 2017 or the current quarter, so it’s difficult to gauge management’s upbeat declaration that demand was bouncing back. Even with today’s drop, Knoll shares are up 27% over the past year, and the company’s ability to drive modest profit growth in spite of falling revenue is encouraging, though a sales slide could also be a warning sign. Considering the company’s modest valuation and its record of beating analyst estimates, I’d give management another quarter or two to show that the revenue decline was just a blip rather than a trend.

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Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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