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Leggett & Platt Inc. (LEG - Analyst Report) is set to report fourth-quarter 2013 results on Jan 24. Last quarter, the company’s earnings were below the expectations. Let us see how things are developing for this announcement.

Factors Impacting Last Quarter

The company’s earnings for third-quarter 2013 declined 4.4% to 43 cents per share due to lower sales and negative comps. Results were also impacted by exclusion of the acquisition gain in the quarter. Total sales of the company fell 2.1% year over year to $957.7 million and it lagged the Zacks Consensus Estimate of $993.0 million.

Prompted by its weak third-quarter performance, the company revised its sales and earnings per share guidance for full-year 2013. It now expects sales to rise 1% to $3.75 billion, against the previous forecast of $3.75–$3.85 billion. Adjusted EPS is expected to come in the range of $1.50–$1.55, compared with the prior projection of $1.50–$1.65.

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 #3 (Hold): Leggett’s Zacks Rank #3 (Hold) has little effect on the predictive power of ESP because the Zacks Rank #3 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 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.

Baidu, Inc. (BIDU - Snapshot Report) with an Earnings ESP of +7.09% and a Zacks Rank #1 (Strong Buy)

Seagate Technology public Ltd. Co. (STX - Analyst Report) with an Earnings ESP of +1.44% and a Zacks Rank #1 (Strong Buy)

Pinnacle Financial Partners Inc. (PNFP - Snapshot Report) with an Earnings ESP of +2.33% and a Zacks Rank #1 (Strong Buy).

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