Results: Leggett & Platt, Incorporated Delivered A Surprise Loss And Now Analysts Have New Forecasts

Last week saw the newest second-quarter earnings release from Leggett & Platt, Incorporated (NYSE:LEG), an important milestone in the company's journey to build a stronger business. Revenues came in at US$1.1b, in line with estimates, while Leggett & Platt reported a statutory loss of US$4.39 per share, well short of prior analyst forecasts for a profit. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Leggett & Platt

Taking into account the latest results, Leggett & Platt's four analysts currently expect revenues in 2024 to be US$4.43b, approximately in line with the last 12 months. Leggett & Platt is also expected to turn profitable, with statutory earnings of US$1.08 per share. Before this earnings report, the analysts had been forecasting revenues of US$4.43b and earnings per share (EPS) of US$1.04 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target rose 5.9% to US$12.00, suggesting that higher earnings estimates flow through to the stock's valuation as well. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Leggett & Platt, with the most bullish analyst valuing it at US$13.00 and the most bearish at US$11.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that revenue is expected to reverse, with a forecast 3.6% annualised decline to the end of 2024. That is a notable change from historical growth of 1.7% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.8% annually for the foreseeable future. It's pretty clear that Leggett & Platt's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Leggett & Platt following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Leggett & Platt going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Leggett & Platt (at least 1 which is a bit unpleasant) , and understanding them should be part of your investment process.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com