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Leggett (LEG) to Post Q3 Earnings: What's in the Offing?

Leggett & Platt, Incorporated LEG is scheduled to release third-quarter 2021 results on Nov 1, after market close.

In the last reported quarter, the company reported impressive earnings and net sales. Its adjusted earnings topped the Zacks Consensus Estimate by 29.4% and rose a whopping 340% from the year-ago quarter. The company’s net sales topped the consensus mark by 4.3% and increased 50.2% from the prior-year level.

Its earnings surpassed the consensus mark in each of the trailing nine quarters.

Trend in Estimate Revision

The Zacks Consensus Estimate for Leggett’s third-quarter earnings has remained stable at 76 cents per share over the past 60 days. The estimated figure indicates a 5% decline from the year-ago earnings of 80 cents per share. The consensus mark for revenues is $1.31 billion, suggesting 8.1% year-over-year growth.

Factors to Note

Leggett’s business is expected to have registered trade sales growth in third-quarter 2021 owing to strong demand in residential end markets and solid housing industry. Improved demand for home-related products and autos is expected to have aided its top line. Also, recovering Hydraulic Cylinders, Work Furniture and Aerospace markets might have added to the positives. Raw material-related selling price increase and focus on containment of fixed costs are expected to have supported growth.

The Zacks Consensus Estimate for Bedding Products’ trade sales (accounting for 47.6% of total 2020 revenues) is pegged at $654 million, indicating an increase of 10.8% from $590 million in the year-ago period.

For Specialized Products (comprising 20.8% of total revenues), the consensus estimate for the segment’s trade sales is pegged at $260 million, indicating an improvement of 7% year over year.

The consensus estimate for trade sales from the Furniture, Flooring & Textile Products segment (comprising 31.5% of total revenues) is pegged at $392 million, indicating 4.5% growth from the prior-year quarter.

Organically, the consensus estimate for total sales growth is pegged at 7.8%, indicating a turnaround from a decline of 3% reported a year ago. Its systematic inorganic drive — which has been strongly contributing to top-line growth — should have given a meaningful boost to total sales.

Yet, persistent supply chain disruptions and chemical, semiconductors, labor, and transportation-related woes are likely to weigh on third-quarter results. Also, supplier production disruptions and logistics challenges are likely to have added to the woes.
The consensus estimate for Bedding Products’ EBIT indicates 1.4% growth from the prior-year quarter. The same for Specialized Products and Furniture, Flooring & Textile Products segments’ EBIT indicates 13.6% and 4.3% fall from the prior-year quarter, respectively.

What Our Quantitative Model Predicts

Our proven model does not conclusively predict an earnings beat for Leggett this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Leggett currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks With Favorable Combination

Here are some stocks from the Zacks Consumer Discretionary space that investors may consider, as our model shows that these have the right combination of elements to deliver an earnings beat this time around.

Sonos, Inc. SONO has an Earnings ESP of +200.00% and a Zacks Rank #1.

Golden Entertainment, Inc. GDEN has an Earnings ESP of +37.45% and a Zacks Rank #1.

Central Garden & Pet Company CENT has an Earnings ESP of +22.22% and holds a Zacks Rank #2.

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