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Leggett's (LEG) Q2 Earnings to Benefit From Strong Demand

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Leggett & Platt, Incorporated (LEG - Free Report) is slated to release second-quarter 2021 results on Aug 2, after market close.

In the last reported quarter, the company reported impressive earnings and net sales. Its adjusted earnings topped the Zacks Consensus Estimate by 56.1% and rose 94% from the year-ago quarter. The company’s net sales also topped the consensus mark by 1% and increased 10.1% from the prior-year level.

Its earnings surpassed the consensus mark in each of the trailing eight quarters.

Trend in Estimate Revision

The Zacks Consensus Estimate for earnings for the quarter to be reported has remained stable at 51 cents per share over the past 60 days. The estimated figure indicates 218.8% growth from the year-ago earnings of 16 cents per share. The consensus mark for revenues is $1.22 billion, suggesting 44.1% year-over-year growth.

Factors to Note

Leggett’s business is expected to have registered impressive earnings and trade sales growth in second-quarter 2021 owing to strong demand in residential end markets as well as solid housing industry. Improved demand in home-related products and autos is expected to have aided its top line. Also, recovering Hydraulic Cylinders, Work Furniture and Aerospace markets might have added to the positives. Raw material-related selling price increase and focus on containment of fixed costs are expected to have supported growth.

The Zacks Consensus Estimate for Bedding Products’ trade sales (accounting for 47.6% of total 2020 revenues) is pegged at $570 million, indicating an increase of 38.7% from $411 million in second-quarter 2020.

For Specialized Products (comprising 20.8% of total revenues), the consensus estimate for the segment’s trade sales is pegged at $240 million, indicating an improvement of 70.2% year over year.

The consensus estimate for trade sales from the Furniture, Flooring & Textile Products segment (comprising 31.5% of total revenues) is pegged at $407 million, indicating 38.4% growth from the prior-year quarter.

Organically, the consensus estimate for total sales growth is pegged at 43.3%, indicating a turnaround from a decline of 31% reported a year ago. Its systematic inorganic drive — which has been strongly contributing to top-line growth — should have given a meaningful boost to total sales.

Coming to the bottom-line projections, the consensus estimate for Bedding Products, Specialized Products and Furniture, Flooring & Textile Products segments’ EBIT indicates 112.3%, 377.2% and 36.5% growth from the prior-year quarter, respectively.

Yet, persistent supply chain constraints and disruption in chemical, semiconductors, labor and transportation are likely to somewhat put pressure on second-quarter results.

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 0.00%. 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 With Favorable Combination

Here are some stocks from the Zacks Consumer Discretionary space that investors may consider, as our model shows that these have the right combination of elements to deliver an earnings beat this time around.

Caesars Entertainment, Inc. (CZR - Free Report) has an Earnings ESP of +265.63% and a Zacks Rank #2.

Mattel, Inc. (MAT - Free Report) has an Earnings ESP of +100.00% and a Zacks Rank #2.

Boyd Gaming Corporation (BYD - Free Report) has an Earnings ESP of +54.29% and sports a Zacks Rank #1.