Leggett & Platt Q3 Earnings: Can NYSE:LEG Hit Its $0.71 EPS Target?

in EARNINGS/INVESTING IDEAS by

Leggett & Platt, Incorporated (NYSE:LEG) is scheduled to report Q3 earnings results after markets close for trading on November 2, 2020.

The company is expected to report earnings of $0.71/share on revenue of $1.269 billion. The consensus earnings per share (EPS) of $0.71/share is based on a poll of 4 analysts and represents a decline in eps of −6.9% over the same quarter last year, when the company reported earnings of $0.76/share.

The revenue forecast of $1.269 billion based on a poll of 4 analysts implies a year-over-year (YoY) growth in revenue of 2.4%. Last year the company reported $1.239 billion in revenue for the quarter.

Expected to report EPS contraction of −6.9% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $1,268.77 $1,239.30 2.4%
EPS $0.71 $0.76 −6.9%

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, and missed expectations 2 quarters.

What are your expectations from Leggett & Platt, Incorporated for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.07 $0.16 137.0% Beat
Q1, 2020 $0.40 $0.41 3.8% Beat
Q4, 2019 $0.67 $0.68 2.3% Beat
Q3, 2019 $0.67 $0.76 13.0% Beat
Q2, 2019 $0.63 $0.64 0.9% Beat
Q1, 2019 $0.52 $0.49 −4.9% Missed
Q4, 2018 $0.53 $0.62 17.0% Beat
Q3, 2018 $0.71 $0.67 −5.9% Missed

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by falling −5.3%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 3, 2020 $40.09 $37.98 −5.3% Decline
May 4, 2020 $33.75 $30.34 −10.1% Decline
February 3, 2020 $47.59 $47.53 −0.1% Decline
October 28, 2019 $45.25 $51.57 14.0% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −3.02, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.02 implies a 0.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

Leggett & Platt, Incorporated is currently trading at $43.19/share, down −2.8% for the day. The company is trading at approximately 77.9% of its 52-week high of $55.42/share. The company’s stock price is up 13.7% since the last earnings report and down −2.4% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 43.61 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:LEG Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 25.30 and a forward P/E multiple of 22.09.

Leggett & Platt, Incorporated’s current share price also implies a price-to-book (P/B) multiple of 4.71. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $43.19
P/E Ratio 25.3x
P/E Ratio (Fwd) 22.1x
PEG Ratio −1.2
Total Debt / Total Capital 28.1%
Levered Free Cash Flow $471.2 million
EV / EBITDA 13.3x

Finbox

Leggett & Platt, Incorporated is a mid-cap stock with a market capitalization of $5.718 billion and a total enterprise value of $7.814 billion. The company operates in the Consumer Discretionary sector and the Household Durables industry.

Leggett & Platt, Incorporated designs and produces various engineered components and products worldwide. It operates through three segments: Bedding Products; Furniture, Flooring & Textile Products; and Specialized Products. The company offers innersprings, wire forms, specialty foams, and machines to shape wire into various types of innersprings; industrial sewing/finishing machines, conveyor lines, mattress packaging, and glue-drying equipment, as well as quilting machines; and structural fabrics, carpet cushions and hard surface flooring underlayment, and geo components to manufacturers of finished bedding, upholstered furniture, packaging, filtration, and draperies; flooring retailers and distributors of carpet cushions; and contractors, landscapers, road construction companies, and government agencies using geo components. It also provides drawn wires and steel rods to packaging and baling companies, mechanical spring manufacturers, and wire distributors, as well as bedding and furniture components, and automotive seat support and lumbar systems. In addition, the company offers bases, columns, back rests, control devices, and casters and frames; private-label finished furniture; beds and bed frames; adjustable beds; and steel mechanisms and hardware, and springs and seat suspensions to upholstered and office furniture manufacturers; department stores and big box retailers; e-commerce retailers; and mattress and furniture retailers. Further, it provides mechanical and pneumatic lumbar support and massage systems, seat suspension systems, motors and actuators, and cables; titanium, nickel, and stainless steel tubing, formed tube, and tube assemblies; and engineered hydraulic cylinders to automobile and aerospace OEMs, mobile equipment OEMs, and aerospace suppliers. The company sells its products through sales representatives and distributors. Leggett & Platt, Incorporated was founded in 1883 and is based in Carthage, Missouri.

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