In response to the rapidly changing economic environment due to coronavirus-led shutdowns, Leggett & Platt, Incorporated LEG has withdrawn its 2020 guidance, which was issued during the fourth-quarter 2019 earnings release.
The company has temporarily closed some of its facilities due to reduction in demand in a few markets served as a result of the recent economy slowdown. It intends to closely discuss the impact of the pandemic on business operations during first-quarter 2020 earnings call. Notably, its first-quarter results are scheduled to release on May 4.
Strong Cash Position & Disciplined Capital Allocation Strategy Bodes Well
Notably, it expects to meet its current liquidity needs from operating cash flow and commercial paper market. Until August 2022, it has no significant debt for maturities. On a further encouraging note, Leggett is taking the required steps to reduce expenses, manage costs and defer capital spending.
In 2019, the company generated record cash flow of $668 million. Moreover, Leggett plans to continue with the share repurchase program, which has a standing authorization to buy back up to 10 million shares every year.
Leggett has always maintained a disciplined capital allocation strategy, and enhanced shareholder returns through dividends and buyback activity. These activities reflect the company’s sound financial position.
COVID-19 Shutdowns to Weigh on Near-Term Results
The recent economic slowdown resulting from shutdowns due to coronavirus has raised concerns for many industries. The U.S. furniture market is also witnessing shutdown woes.
Leggett and other Zacks Furniture industry players like Masonite International Corporation DOOR, La-Z-Boy Incorporated LZB, and WillScot Corporation WSC are expecting the negative economic impacts of this pandemic to persist in the near term.
Shares of this Zacks Rank #3 (Hold) company have declined 52.4%, almost in line with the industry’s 51.8% decline. The downside reflects the rapidly evolving market conditions due to the pandemic. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
That said, Leggett’s diversified businesses, solid balance sheet and disciplined capital allocation position it well for the long term.
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.
Today, See These 5 Potential Home Runs >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Leggett & Platt, Incorporated (LEG) : Free Stock Analysis Report
La-Z-Boy Incorporated (LZB) : Free Stock Analysis Report
WillScot Corporation (WSC) : Free Stock Analysis Report
Masonite International Corporation (DOOR) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research