Leggett & Platt, Incorporated LEG is scheduled to release fourth-quarter 2022 results on Feb 6, after market close.
In the last reported quarter, the company reported better-than-expected earnings and net sales. Its adjusted earnings topped the Zacks Consensus Estimate by 6.1% but decreased 26.8% from the year-ago quarter. The company’s net sales topped the consensus mark by 5.1% but declined 2% from the prior-year level.
Its earnings surpassed the consensus mark in each of the trailing 10 quarters.
Trend in Estimate Revision
The Zacks Consensus Estimate for Leggett’s fourth-quarter 2022 earnings has remained stable at 48 cents per share over the past 60 days. The estimated figure indicates a 37.7% decline from the year-ago earnings of 77 cents per share. The consensus mark for revenues is $1.22 billion, suggesting an 8.5% fall year over year.
Factors to Note
Leggett’s business is expected to have lackluster trade sales and earnings in fourth-quarter 2022 thanks to persistent supply chain disruptions and chemical, semiconductor, labor, and transportation-related woes. Also, supplier production disruptions and logistics challenges are likely to have added to the negatives. The company expects the fourth quarter to be slightly lower than the third quarter, primarily due to further reductions in steel rod production in response to the slowing steel market.
Leggett & Platt, Incorporated Price and EPS Surprise
Leggett & Platt, Incorporated price-eps-surprise | Leggett & Platt, Incorporated Quote
For the fourth quarter, net sales are expected to be within $1.15–$1.25 billion and earnings per share are anticipated to be between 42 cents and 57 cents. This reflects an almost 10% and 35.7% year-over-year decline, respectively.
The Zacks Consensus Estimate for Bedding Products’ trade sales (accounting for 48.4% of total 2021 revenues) is pegged at $546 million, indicating a decrease of 15.6% from $647 million in the year-ago period.
The consensus estimates for trade sales from the Furniture, Flooring & Textile Products segment (comprising 31.9% of total revenues) are pegged at $393 million, indicating a 6.8% decline from the prior-year quarter’s $421.6 million.
Organically, the consensus estimate for total sales is likely to decline 9% versus the 3% decline reported a year ago.
Nonetheless, its systematic inorganic drive — which has been strongly contributing to top line growth — should have aided total sales. Also, strong demand in the Specialized Products segment, particularly in Automotive, Aerospace and Hydraulic Cylinders, a favorable selling price, and Hydraulic Cylinders acquisition are likely to have added benefits. Raw material-related selling price increases and a focus on containment of fixed costs are expected to have supported growth.
For Specialized Products (comprising 19.7% of total revenues), the consensus estimate for the segment’s trade sales is pegged at $279 million, indicating an improvement of 5.7% year over year from $264 million.
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, as you will see below.
Earnings ESP: It has an Earnings ESP of 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 #5 (Strong Sell).
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 they have the right combination of elements to deliver an earnings beat this time around.
BJ's Wholesale Club Holdings, Inc. BJ boasts an Earnings ESP of +9.09% and a Zacks Rank #1.
BJ’s earnings topped the consensus mark in all the last four quarters, with the average earnings surprise being 18.2%. Earnings for the to-be-reported quarter are expected to grow 10% year over year.
iQIYI, Inc. IQ has an Earnings ESP of +20.00% and a Zacks Rank #2.
IQ’s earnings topped the consensus mark in three of the last four quarters and missed the same in the other one, with the average negative surprise being 9%. Earnings for the to-be-reported quarter are expected to increase 125% year over year.
Red Rock Resorts, Inc. RRR has an Earnings ESP of +6.43% and a Zacks Rank #3.
RRR’s earnings topped the consensus mark in all the last four quarters, with the average earnings surprise being 66.7%. Earnings for the to-be-reported quarter are likely to grow 1.8% year over year.
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