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Leggett & Platt Inc. (LEG - Analyst Report) is set to report third-quarter fiscal 2013 results on Oct 23. Last quarter, the company’s earnings were in line with expectations. Let’s see how things are shaping up for this announcement.

Recent Growth Drivers

Leggett’s second-quarter earnings were 13.0% higher than the year-ago quarter. The earnings upside mainly resulted from solid sales and comps performance at the company’s stores. The company’s comps benefited from a rise in unit volumes and positive impact from acquisitions, partly offset by declining rod mill trade sales.

Moreover, net sales grew 3% year over year driven by improved sales at all the segments. Gross profit grew year over year mainly due to higher sales, partly offset by a rise in the cost of goods sold.

On the earnings call, the company provided fiscal 2013 earnings and sales expectations. The company expects fiscal 2013 earnings per share in the range of $1.50–$1.65, while sales are projected to increase 1%–4% to $3.75–$3.85 billion. The current Zacks Consensus Estimate is pegged at $1.56 per share.

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 of #1, 2 or 3 for this to happen. This is not the case here as you will see below.

Zacks ESP: ESP for Leggett is 0.00% since the Most Accurate Estimate stands at 44 cents, which is in line with the Zacks Consensus Estimate.

Zacks Rank #2 (Buy): Leggett’s Zacks Rank #2 (Buy) has little effect on the predictive power of ESP because the Zacks Rank #2 when combined with a 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 momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows that they have the right combination of elements, i.e., a positive Zacks Earnings ESP and a Zacks Rank #1, #2 or #3.

Best Buy Co. Inc. (BBY - Analyst Report) with an Earnings ESP of +30.00% and a Zacks Rank #2 (Buy).

DSW Inc. (DSW - Snapshot Report) with an Earnings ESP of +2.59% and a Zacks Rank #2 (Buy).

Dollar General Corp. (DG - Analyst Report) has an Earnings ESP of +1.41% and a Zacks Rank #2 (Buy).

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