News Flash: 5 Analysts Think Leggett & Platt, Incorporated (NYSE:LEG) Earnings Are Under Threat
The latest analyst coverage could presage a bad day for Leggett & Platt, Incorporated (NYSE:LEG), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon. Surprisingly the share price has been buoyant, rising 23% to US$29.88 in the past 7 days. With such a sharp increase, it seems brokers may have seen something that is not yet being priced in by the wider market.
Following the latest downgrade, the current consensus, from the five analysts covering Leggett & Platt, is for revenues of US$4.1b in 2020, which would reflect an uneasy 13% reduction in Leggett & Platt's sales over the past 12 months. Statutory earnings per share are anticipated to plummet 48% to US$1.28 in the same period. Prior to this update, the analysts had been forecasting revenues of US$4.8b and earnings per share (EPS) of US$2.49 in 2020. Indeed, we can see that the analysts are a lot more bearish about Leggett & Platt's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.
See our latest analysis for Leggett & Platt
The consensus price target fell 24% to US$34.40, with the weaker earnings outlook clearly leading analyst valuation estimates. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Leggett & Platt analyst has a price target of US$51.00 per share, while the most pessimistic values it at US$20.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with the forecast 13% revenue decline a notable change from historical growth of 3.9% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.0% annually for the foreseeable future. It's pretty clear that Leggett & Platt's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.
Unfortunately, the earnings downgrade - if accurate - may also place pressure on Leggett & Platt'smountain of debt, which could lead to some belt tightening for shareholders. To see more of our financial analysis, you can click through to our free platform to learn more about its balance sheet and specific concerns we've identified.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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