Leggett & Platt, Incorporated (NYSE:LEG) shares fell 3.7% to US$47.53 in the week since its latest full-year results. Leggett & Platt reported in line with analyst predictions, delivering revenues of US$4.8b and statutory earnings per share of US$2.47, suggesting the business is executing well and in line with its plan. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
Taking into account the latest results, Leggett & Platt's six analysts currently expect revenues in 2020 to be US$4.81b, approximately in line with the last 12 months. Statutory per share are forecast to be US$2.48, approximately in line with the last 12 months. Before this earnings report, analysts had been forecasting revenues of US$4.95b and earnings per share (EPS) of US$2.72 in 2020. It's pretty clear that analyst sentiment has fallen after the latest results, leading to lower revenue forecasts and a small dip in earnings per share estimates.
Analysts made no major changes to their price target of US$50.50, suggesting the downgrades are not expected to have a long-term impact on Leggett & Platt's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Leggett & Platt analyst has a price target of US$54.00 per share, while the most pessimistic values it at US$47.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. We would highlight that Leggett & Platt's revenue growth is expected to slow, with forecast 1.3% increase next year well below the historical 3.9%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 5.5% per year. Factoring in the forecast slowdown in growth, it seems obvious that analysts still expect Leggett & Platt to grow slower than the wider market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Unfortunately, analysts also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Leggett & Platt analysts - going out to 2024, and you can see them free on our platform here.
You can also see whether Leggett & Platt is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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