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Leggett (LEG) to Report Q2 Earnings: What's in the Offing?

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Leggett & Platt, Incorporated (LEG - Free Report) is slated to release second-quarter 2020 results on Aug 3, after market close.

In the last reported quarter, the company’s earnings topped the Zacks Consensus Estimate by 2.5% but revenues missed the same by 6.4%. On a year-over-year basis, earnings and revenues declined 16.3% and 9.5%, respectively.

Leggett’s earnings topped the consensus mark in all the last four quarters, with the average surprise being 5.1%.

However, the company has a dismal sales surprise history. It missed the consensus mark for sales in nine of the last 12 quarters owing to lower deliveries across the business.

Trend in Estimate Revision

The Zacks Consensus Estimate for second-quarter loss has narrowed to 2 cents from 7 cents per share over the past 30 days. In the year-ago quarter, the company reported earnings of 64 cents per share. The consensus mark for revenues is $913.8 million, suggesting a 24.7% year-over-year decline.

Factors to Note

The company is expected to have registered lower earnings and revenues in the second quarter due to widespread closure of traditional retailers owing to the COVID-19 pandemic. Although its performance has been improving from the beginning of the second quarter, supply chain disruptions and reduced production rate are expected to weigh on the results.

Meanwhile, Leggett has been suffering from lower volumes, reduced raw material-related selling price and currency headwinds over the last few quarters.

Its exit from Fashion Bed and Drawn Wire, along with decline in demand in U.S. Spring, Automotive and Hydraulic Cylinders, Work Furniture and Home Furniture businesses will likely reflect on the company’s second-quarter results.

Additionally, Leggett has been suffering from volatility in raw material prices, with steel being one of the key raw materials, over the last few quarters.

That said, its focus on the strategic plan — which comprises divesture of low-performing businesses, and improvement in margins and returns — is commendable. The positive impacts of these initiatives are expected to have somewhat offset the headwinds in to-be-reported quarter.

What Our Quantitative Model Predicts

Our proven model does not conclusively predict an earnings beat for Leggett this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -100.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Leggett currently carries a Zacks Rank #3.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Worth a Look

Here are some companies in the Zacks Consumer Discretionary sector, which according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.

Cinemark Holdings, Inc. (CNK - Free Report) has an Earnings ESP of +4.33% and holds a Zacks Rank #3.

Callaway Golf Company (ELY - Free Report) has an Earnings ESP of +73.75% and carries a Zacks Rank #3.

International Game Technology PLC (IGT - Free Report) has an Earnings ESP of +19.07% and carries a Zacks Rank #2.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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