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Raymond James Downgrades Leggett & Platt to ‘Market Perform’


Dec. 4 2020, Updated 10:52 a.m. ET

Price movement

Leggett & Platt (LEG) has a market capitalization of $7.2 billion. The stock fell by 1.3% to close at $51.87 per share on August 1, 2016.

The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -3.0%, 1.5%, and 25.2%, respectively, on the same day. LEG is trading 1.5% below its 20-day moving average, 1.9% above its 50-day moving average, and 12.7% above its 200-day moving average.

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Related ETFs and peers

The SPDR S&P Homebuilders ETF (XHB) invests 3.1% of its holdings in Leggett & Platt. The ETF tracks a broad-based, equal-weighted index of US companies involved in the homebuilding industry. The YTD price movement of XHB was 5.9% on August 1.

The iShares Dow Jones Select Dividend ETF (DVY) invests 0.77% of its holdings in Leggett & Platt. The ETF tracks a dividend-weighted index of US companies. The index selects roughly 100 stocks from a broad market-cap universe based on dividend yield.

The market capitalizations of Leggett & Platt’s competitors are as follows:

  • Genuine Parts Company (GPC) — $15.3 billion
  • Illinois Tool Works (ITW) — $41.5 billion

Leggett & Platt’s rating

Raymond James has downgraded Leggett & Platt’s rating to “market perform” from “outperform.”

On July 29, 2016, Hilliard Lyons downgraded Leggett & Platt’s rating to “underperform” from “neutral.”

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Performance of Leggett & Platt in 2Q16

Leggett & Platt reported 2Q16 net sales of $958.9 million, a fall of 3.9% compared to net sales of $997.3 million in 2Q15. Sales from the company’s residential furnishings and industrial materials segments fell by 5.7% and 28.5%, respectively, and sales from its commercial products and specialized products segments rose by 1.0% and 9.2%, respectively, in 2Q16 compared to 2Q15.

LEG’s gross profit margin and EBIT (earnings before interest and taxes) rose by 5.5% and 22.9%, respectively, in 2Q16 compared to the prior year’s period.

LEG’s net income and EPS (earnings per share) rose to $121.2 million and $0.87, respectively, in 2Q16 compared to $77.7 million and $0.54, respectively, in 2Q15. It reported adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) and adjusted EPS of $161.0 million and $0.66, respectively, in 2Q16, rises of 9.1% and 24.5%, respectively, compared to 2Q15.

LEG’s cash and cash equivalents and inventories rose by 3.5% and 2.5%, respectively, in 2Q16 compared to 2Q15. Its current ratio and long-term debt-to-equity ratio rose to 2.0x and 1.0x, respectively, in 2Q16 compared to 1.5x and 0.75x, respectively, in 2Q15.

In 2Q16, the company repurchased 1.2 million shares worth of its common stock at an average price of $49.39. It also issued 0.3 million shares through employee benefit plans and option exercises.


LEG has made the following projections for 2016:

  • sales of ~$3.9 billion, “assum[ing] unit volume growth in the mid-single digits, offset by a 2% reduction from commodity deflation and currency impacts, and a 3% year-over-year decrease from the combination of 4Q 2015 and 2Q 2016 divestitures, net of small acquisitions.”
  • an EBIT margin of ~13%
  • EPS from continuing operations in the range of $2.45–$2.60, including 2Q16’s EPS benefit of $0.06 from unusual items
  • cash from operations of over ~$500 million
  • capital expenditure of $130 million
  • dividend payments of ~$175 million
  • the repurchase of 4 million–5 million shares
  • the issuance of ~2 million shares for employee benefit plans
  • an effective tax rate of 25%

Now we’ll discuss Skechers USA.


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