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Will Leggett (LEG) Sustain its Earnings Beat Trend in Q4? - Analyst Blog

Zacks Equity Research
Updated

Leggett & Platt Inc. (LEG), leading engineered products manufacturer, is slated to report its fourth-quarter 2014 results after the market closes on Jan 29. In the last quarter, the company had delivered a positive earnings surprise of 2%. Let’s see how things are shaping up for this announcement.

Factors Influencing this Quarter

Leggett’s management seems to be impressed with its sound financials and anticipates record earnings in 2014. For 2014, the company raised the lower-end of its adjusted earnings guidance to $1.75 from $1.70, hence earnings are now expected in the range of $1.75—$1.85 per share. Thereafter, Leggett remains optimistic about its performance, given the strength in its Automotive, Aerospace, Bedding, Home Furniture and Office Furniture businesses.

In the trailing four quarters, Leggett surpassed the Zacks Consensus Estimate three times, adding up to an average surprise of 1.9%. Further, the company beat the Zacks Consensus Estimate in the past two quarters, posting an average surprise of 2.1%.

Earnings Whispers?

Our proven model does not conclusively show that Leggett & Platt is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:

Zacks ESP: Earnings ESP for Leggett is currently pegged at 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate both stand at 44 cents.

Zacks Rank: Leggett & Platt carries a Zacks Rank #2 (Buy). Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s 0.00% ESP makes surprise prediction difficult. We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks that Warrant a Look

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Bebe Stores Inc. (BEBE) has an Earnings ESP of +50.00% and a Zacks Rank #1 (Strong Buy).

Chipotle Mexican Grill Inc. (CMG) has an Earnings ESP of +3.18% and a Zacks Rank #2.

Archer Daniels Midland Company (ADM) has an Earnings ESP of +5.50% and a Zacks Rank #3 (Hold).


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LEGGETT & PLATT (LEG): Free Stock Analysis Report
 
CHIPOTLE MEXICN (CMG): Free Stock Analysis Report
 
ARCHER DANIELS (ADM): Free Stock Analysis Report
 
BEBE STORES INC (BEBE): Free Stock Analysis Report
 
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Zacks Investment Research