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Higher Steel Prices Likely to Dent Leggett (LEG) Q3 Earnings
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Leggett & Platt, Incorporated (LEG - Free Report) is slated to release third-quarter 2017 results on Oct 27. The question lingering in investors’ minds is whether this furniture producer will be able to deliver a positive earnings surprise in the quarter to be reported. While Leggett’s bottom line missed the Zacks Consensus Estimate in the last quarter, the company has a mixed record of earnings surprise in the trailing four quarters. Well, let’s see how things are shaping up prior to this announcement.
Leggett & Platt, Incorporated Price and EPS Surprise
The current Zacks Consensus Estimate for the quarter under review is pegged at 61 cents, which represents a 9% decline from the year-ago period figure of 67 cents. However, the earnings estimate has been stable over the last 30 days. Further, analysts polled by Zacks expect revenues of $1,010 million, up 6.4% from the year-ago quarter.
Factors at Play
Leggett remains exposed to major volatility in raw material prices, with steel being one of the company’s key raw materials and the market for the same being cyclical in nature. Incidentally, the company’s bottom line has declined year over year for three straight quarters now, owing to raw material price inflation. In the last quarter, earnings and EBIT fell 3% and 7.4% year over year, respectively due to steel price inflation. Moreover, management recently announced a second guidance cut for 2017 in less than two months. This was mainly accountable to increased steel price inflation, alongside a rise in LIFO costs and soft demand in the furniture and bedding space.
Battered by these factors, Leggett’s shares have tumbled 8% in the last three months, worse than the industry’s 6.3% drop.
On the brighter side, Leggett remains on track with its 2019 goals — aimed at achieving top-third TSR target in next three years. This will be aided by revenue growth, margin enhancement and shareholder-friendly moves. Though these initiatives bode well for the long run, we believe that Leggett’s bottom line is likely to be hurt by steel price inflation in the third quarter.
What the Zacks Model Unveils?
Our proven model does not conclusively show that Leggett is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Leggett has an Earnings ESP of 0.00%, as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 61 cents. Moreover, the company currently carries a Zacks Rank #4 (Sell). Note that we caution against sell-rated stocks going into earnings announcements.
Stocks With Favorable Combination
Here are some companies you may want to consider as our model shows that these also have the right combination of elements to post earnings beat:
Carter's, Inc. (CRI - Free Report) has an Earnings ESP of +1.33% and a Zacks Rank #2.
The Estée Lauder Companies Inc. (EL - Free Report) has an Earnings ESP of +0.34% and a Zacks Rank #2.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Higher Steel Prices Likely to Dent Leggett (LEG) Q3 Earnings
Leggett & Platt, Incorporated (LEG - Free Report) is slated to release third-quarter 2017 results on Oct 27. The question lingering in investors’ minds is whether this furniture producer will be able to deliver a positive earnings surprise in the quarter to be reported. While Leggett’s bottom line missed the Zacks Consensus Estimate in the last quarter, the company has a mixed record of earnings surprise in the trailing four quarters. Well, let’s see how things are shaping up prior to this announcement.
Leggett & Platt, Incorporated Price and EPS Surprise
Leggett & Platt, Incorporated Price and EPS Surprise | Leggett & Platt, Incorporated Quote
What to Expect?
The current Zacks Consensus Estimate for the quarter under review is pegged at 61 cents, which represents a 9% decline from the year-ago period figure of 67 cents. However, the earnings estimate has been stable over the last 30 days. Further, analysts polled by Zacks expect revenues of $1,010 million, up 6.4% from the year-ago quarter.
Factors at Play
Leggett remains exposed to major volatility in raw material prices, with steel being one of the company’s key raw materials and the market for the same being cyclical in nature. Incidentally, the company’s bottom line has declined year over year for three straight quarters now, owing to raw material price inflation. In the last quarter, earnings and EBIT fell 3% and 7.4% year over year, respectively due to steel price inflation. Moreover, management recently announced a second guidance cut for 2017 in less than two months. This was mainly accountable to increased steel price inflation, alongside a rise in LIFO costs and soft demand in the furniture and bedding space.
Battered by these factors, Leggett’s shares have tumbled 8% in the last three months, worse than the industry’s 6.3% drop.
On the brighter side, Leggett remains on track with its 2019 goals — aimed at achieving top-third TSR target in next three years. This will be aided by revenue growth, margin enhancement and shareholder-friendly moves. Though these initiatives bode well for the long run, we believe that Leggett’s bottom line is likely to be hurt by steel price inflation in the third quarter.
What the Zacks Model Unveils?
Our proven model does not conclusively show that Leggett is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Leggett has an Earnings ESP of 0.00%, as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 61 cents. Moreover, the company currently carries a Zacks Rank #4 (Sell). Note that we caution against sell-rated stocks going into earnings announcements.
Stocks With Favorable Combination
Here are some companies you may want to consider as our model shows that these also have the right combination of elements to post earnings beat:
Pinnacle Foods Inc. has an Earnings ESP of +2.03% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Carter's, Inc. (CRI - Free Report) has an Earnings ESP of +1.33% and a Zacks Rank #2.
The Estée Lauder Companies Inc. (EL - Free Report) has an Earnings ESP of +0.34% and a Zacks Rank #2.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>