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Will Leggett & Platt (LEG) Miss Earnings Estimates in Q3?

Zacks Equity Research
Updated

Leggett & Platt Inc. LEG, leading engineered products manufacturer, is slated to report third-quarter 2015 results on Oct 29. In the last quarter, the company delivered a negative earnings surprise of 1.9%. Let’s see how things are shaping up for this announcement.  

Factors Influencing This Quarter

Following the year-over-year improvement in its second-quarter 2015 earnings, Leggett expects to generate higher sales and operating margins while delivering record earnings in 2015. Also, the company’s strong financials enables it to undertake profitable ventures and boost shareholder value.

However, Leggett’s significant presence in the global market exposes it to various risks associated with operating internationally. The company also faces stiff competition from other regional players on the basis of product quality, pricing, innovation and customer service. Hence, we remain slightly apprehensive about the company’s upcoming results.

Earnings Whispers?

Our proven model does not conclusively show that Leggett 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 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate both are at 56 cents.

Zacks Rank: Leggett & Platt carries a Zacks Rank #3 (Hold). 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:

hhgregg, Inc. HGG has an Earnings ESP of +26.67% and a Zacks Rank #2 (Buy).

The Children's Place, Inc. PLCE has an Earnings ESP of +1.54% and a Zacks Rank #3.

The Clorox Co. CLX has an Earnings ESP of +0.85% and a Zacks Rank #3.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
LEGGETT & PLATT (LEG): Free Stock Analysis Report
 
CLOROX CO (CLX): Free Stock Analysis Report
 
HHGREGG INC (HGG): Free Stock Analysis Report
 
CHILDRENS PLACE (PLCE): Free Stock Analysis Report
 
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Zacks Investment Research