Leggett & Platt (LEG) continues to generate impressive year-over-year growth because of a rebound in its end markets and tight cost controls.
Growth and Income
The company is expected to grow its earnings per share 44.8% in 2010, 29.7% in 2011, and 15.0% over the next three to five years. The stock also offers investors a dividend yield of 4.6%.
This Zacks #1 Rank stock trades at 18.1x 2010 consensus EPS estimates and 14.0x 2011 consensus EPS estimates.
Business
Leggett & Platt designs and produces a range of engineered components and products worldwide. It operates in four segments: Residential Furnishings, Commercial Fixturing & Components, Industrial Materials, and Specialized Products.
First-Quarter Results
The company’s sales from continuing operations were $816 million, 14% higher than in the first quarter of 2009. Unit volumes increased 18%, which partially offset lower prices associated with steel-related deflation that largely occurred during the first half of 2009.
Leggett earned $0.27 per share, beating the Zacks Consensus by 8 cents, or 42.1%. In the last four quarters, Leggett has beaten the Zacks Consensus Estimate by an average of 26.8%.
Management also raised its EPS guidance to $0.95-$1.30.
President and CEO David Haffner said, “We are encouraged to see market improvement and sales growth during the first quarter. That growth, combined with last year’s significant cost reduction efforts, led to meaningful earnings improvement.”
Estimates Moving Higher
After Leggett reported strong first-quarter results and increased its EPS guidance, the 2010 Zacks Consensus Estimate increased 17 cents, or 15.7%, to $1.25, and the 2011 Zacks Consensus Estimate climbed 29 cents, or 21.8%, to $1.62.
Balance Sheet
Leggett ended the first quarter with $247 million in cash and equivalents and debt-to-total capital ratio of 0.33. Additionally, the company has no significant fixed-term debt maturing until 2013, and over $400 million available in its commercial paper program.
The Chart
LEG shares are up about 58% in the last twelve months. The stock sold-off in February and bounced off its 200-day moving average. It peaked in late April at a 52-week high of $25.15. During the recent market correction, LEG shares have dropped a little over $2, but is still 10% below its highs of the year.
