Leggett & Platt, Incorporated (NYSE:LEG): Immense Growth Potential?

On 30 June 2019, Leggett & Platt, Incorporated (NYSE:LEG) released its earnings update. Generally, analysts seem fairly confident, with profits predicted to increase by 18% next year relative to the past 5-year average growth rate of 5.1%. By 2020, we can expect Leggett & Platt’s bottom line to reach US$361m, a jump from the current trailing-twelve-month of US$306m. Below is a brief commentary around Leggett & Platt’s earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here.

See our latest analysis for Leggett & Platt

Can we expect Leggett & Platt to keep growing?

Longer term expectations from the 5 analysts covering LEG’s stock is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.

NYSE:LEG Past and Future Earnings, August 3rd 2019
NYSE:LEG Past and Future Earnings, August 3rd 2019

This results in an annual growth rate of 8.1% based on the most recent earnings level of US$306m to the final forecast of US$421m by 2022. EPS reaches $2.94 in the final year of forecast compared to the current $2.28 EPS today. With a current profit margin of 7.2%, this movement will result in a margin of 8.5% by 2022.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Leggett & Platt, there are three fundamental factors you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Leggett & Platt worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Leggett & Platt is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Leggett & Platt? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.