It has been about a month since the last earnings report for Legget & Platt (LEG Quick QuoteLEG - Free Report) . Shares have added about 3.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Legget & Platt due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Leggett (LEG Quick QuoteLEG - Free Report) Beats on Q1 Earnings, Ups '21 View & Q2 Dividend

Leggett & Platt, Incorporated reported impressive first-quarter 2021 results. On a year-over-year basis, both the top and bottom lines grew on the back of strong demand in residential end markets and the Automotive business, raw material-related selling price increase as well as favorable currency.

Notably, the company raised second-quarter dividend by 5% to 42 cents per share from 40 cents. The dividend will be payable on Jul 15, 2021 to its shareholders of record as of Jun 15, 2021. Impressively, it has been increasing dividend for 50 consecutive years.

Quarter in Details

The company reported adjusted earnings of 64 cents per share, which surpassed the Zacks Consensus Estimate of 41 cents by 56.1%. Also, the metric grew an impressive 94% from the year-ago period backed by improved EBIT, lower tax rate and reduced interest expense.

Net trade sales totaled $1.151 billion, which topped the consensus mark of $1.140 billion by 1% and increased 10.1% from the prior-year level. Organic sales were up 11% year over year. Of the organic growth, volume contributed 4%, raw material-related selling price added 5% and currency accounted for 2%. Divestitures (of small operations in Drawn Wire and the former Fashion Bed business) reduced sales by 1% from the year-ago quarter. Also, weakness in Aerospace ailed total volume.

Adjusted EBIT rose 41% from the prior-year figure to $127.7 million. The upside stemmed from strong volume growth, lower fixed costs, the absence of impairment charge and stock write-off associated with a prior year divestiture. Adjusted EBIT margin also expanded 240 basis points (bps) to 11.1% from the year-ago figure of 8.7%. Adjusted EBITDA margin improved 190 bps year over year to 15.1%.

Segment Details

Net trade sales in Bedding Products (excluding inter-segment sales) increased 9% from the year-ago level to $535.8 million. Volume growth of 2% was driven by solid ECS, European Spring and U.S. Spring businesses. Increased prices contributed 9% and currency added 1%, while divesture reduced sales by 3%.

Adjusted EBIT margin expanded a notable 440 bps to 11.9%. Adjusted EBITDA margin also grew 390 bps year over year to 16.8%.

The Specialized Products segment's trade sales improved 10% from the prior-year figure to $257.6 million. Growth in Automotive and Hydraulic Cylinders drove volume to 3%, partially offset by weak demand in Aerospace. Positive currency and the Aerospace acquisition further added 6% and 1%, respectively, to sales.

EBIT margin expanded 190 bps to 13.7%. EBITDA margin also grew 140 bps year over year.

Trade sales in the Furniture, Flooring & Textile Products segment jumped 12% from the prior-year level to $357.5 million, mainly due to an 8% rise in volume, given strong demand in Geo Components, Home Furniture and Flooring Products' residential businesses. Price increase and currency contributed 3% and 1% to sales, respectively.

EBIT margin of 7.9% was down 20 bps from the prior year. EBITDA margin also contracted 60 bps year over year to 9.6%.

Financials

As of Mar 31, 2021, the company had $1.4 billion of liquidity. It had $333.8 million of cash and cash equivalents at quarter-end compared with $505.8 million in the comparable year-ago period.

Long-term debt at March-end was $1.95 billion, down 19% from the corresponding period of last year’s $2.42 billion. Trailing 12-month debt-to-adjusted EBITDA was 2.46.

Cash provided to operations in the first three months of 2021 totaled $10.6 million versus cash from operations of $10.4 million a year ago.

Raised 2021 Guidance

Backed by strong demand and cost-control measures, Leggett raised its full-year 2021 guidance. The company now expects sales in the range of $4.8-$5 billion versus $4.6-$4.9 billion expected earlier. This indicates year-over-year growth of 12-17%.  Raw material-related price increase, currency benefits and mid-to-high single-digit volume growth are likely to boost sales.

EPS for 2021 is now expected between $2.55 and $2.75 (compared with $2.30 and $2.60 projected earlier). The company now expects EBIT margin between 11% and 11.5% compared with prior anticipation of 10.5-11%.

Meanwhile, capital expenditures, depreciation and amortization costs, operating cash flow, dividend and net interest expense for 2021 are estimated at $150 million, $195 million, $500 million, $220 million and $75 million, respectively. Also, effective tax rate is projected at 23%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 7.8% due to these changes.

VGM Scores

Currently, Legget & Platt has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Legget & Platt has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.