Leggett & Platt Stays Neutral - Analyst Blog
May 15 2013 - 1:10PM
Zacks
Leggett & Platt, Inc. (LEG), the
manufacturer of diverse engineered products and components, remains
on our Neutral list with a price target of $35.00 per share.
Why Reiterate?
A well-diversified customer base, pricing power and solid
research and development (R&D) capabilities, facilitates
Leggett & Platt to float in the soft economic environment. In
order to focus more on its core business operations and improve
financial flexibility, the company is continuously taking strategic
actions to add new products to its portfolio as per the consumers’
changing preferences while simultaneously divesting low-performing
businesses.
We also remained impressed by Leggett’s bottom line performance
in the recent concluded quarter. The company posted earnings of 33
cents per share, which surged 10% from the comparable year-ago
quarter, mainly driven by a sturdy operational performance
comprising effective cost management, better product mix in some
businesses and the acquisition of Western Pneumatic Tube.
Buoyed by strong bottom-line results, management raised the
lower end of its sales growth and earnings guidance for full-year
2013. The company now expects sales to rise in the range of 2–6%
and earnings to come at $1.55–1.75 per share. Earlier, Leggett
projected sales growth of 1–6% and earnings per share in the range
of $1.50–1.75. Currently, the Zacks Consensus Estimate for 2013
stands at $1.61 per share.
On the flip side, we remain concerned about increasing material
costs, intense competition and exposure to adverse foreign currency
translations. The company operates in a competitive environment and
strives to maintain its market share, actively competing with
numerous manufacturers and distributors of consumer and commercial
products.
Given the pros and cons inhibited in the stock we prefer to
remain on the sidelines, and maintain our Neutral recommendation.
This is also well supported by the company’s current Zacks Rank #3
(Hold).
Other Stocks Worth Considering
Better performing stocks in the home furnishing appliances
industry are Hooker Furniture Corp. (HOFT),
Mohawk Industries Inc. (MHK) and Virco
Mfg. Corporation (VIRC). Hooker and Mohawk have a Zacks
Rank #1 (Strong Buy) while Virco carries a Zacks Rank #2 (Buy).
HOOKER FURNITUR (HOFT): Free Stock Analysis Report
LEGGETT & PLATT (LEG): Free Stock Analysis Report
MOHAWK INDS INC (MHK): Free Stock Analysis Report
VIRCO MFG (VIRC): Get Free Report
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