On Friday, Truist Securities adjusted its outlook on Leggett and Platt (NYSE:LEG), a diversified manufacturer of engineered components and products for homes, offices, and vehicles. The firm increased the price target to $13.00, up from the previous $13.00, while retaining a Hold rating on the stock.
The modification of the price target comes amid a market scenario where Leggett and Platt's stock demonstrated resilience, inching up 1% on a day when the broader market, as indicated by the S&P 500 Index, fell by 2%. This performance occurred despite a general downturn in trading within the company's sector.
The company's financial results aligned with expectations, but notably, Leggett and Platt maintained its bottom line guidance, with the mid-point remaining steady despite a slight dip in sales figures. This stability in the company's earnings forecast has been a focal point in the assessment by Truist Securities.
Karl Glassman, the returning CEO of Leggett and Platt, has brought attention to a portfolio review that is underway. According to the analyst's statement, this review is anticipated to result in divestitures alongside the ongoing cost restructuring efforts. These strategic moves are expected to unfold in the next year.
The decision by Truist Securities to maintain the Hold rating while raising the price target reflects an anticipation of structural changes within Leggett and Platt. The firm is monitoring the potential impact of these changes on the company's future performance and valuation.
In other recent news, Leggett & Platt faced a challenging second quarter, reporting sales of $1.1 billion and adjusted earnings per share of $0.29, marking a decrease from the previous year. This was primarily due to weak demand in residential markets, challenges in the bedding industry, and the loss of a key customer. Despite these headwinds, the company is progressing with its restructuring plan, which is expected to yield an EBIT benefit of $10 million to $15 million in 2024.
The company has revised its 2024 sales guidance to between $4.3 billion and $4.5 billion, and adjusted EPS guidance to $1.10 to $1.25. Debt reduction remains a priority, with $73 million reduced in the second quarter. The company is also exploring potential divestitures in the first half of the next year as part of its portfolio optimization strategy.
Leggett & Platt is making efforts towards innovation and diversifying its customer base to improve volume. It also expects to generate $15 million to $25 million from real estate sales related to the restructuring plan in 2024. These recent developments reflect the company's commitment to improving its financial position and navigating industry challenges.
InvestingPro Insights
As Leggett and Platt (NYSE:LEG) navigates through strategic changes and market fluctuations, real-time data from InvestingPro offers a deeper perspective on the company's current financial standing. With a market capitalization of $1.75 billion and a recent uptick in stock price, the company has demonstrated a strong return over the past month, with a 15.12% increase. Despite this, the company has experienced a 42.97% decline over the last six months, reflecting volatility in its stock performance.
InvestingPro Tips highlight that Leggett and Platt has a longstanding history of shareholder returns, having raised its dividend for 53 consecutive years. This commitment to shareholder value is further underscored by a high shareholder yield and the maintenance of dividend payments for 54 years. Analysts predict that the company will be profitable this year, which aligns with the company's own steady earnings forecast despite a dip in sales.
For investors seeking a comprehensive analysis, there are additional InvestingPro Tips available, which include insights on earnings revisions, profitability, and asset liquidity. These tips, along with detailed metrics such as the company's P/E ratio of 11.35 and a dividend yield of 1.55%, can help investors make informed decisions. To explore these further, visit InvestingPro for a total of 11 additional tips on Leggett and Platt.
The insights provided by InvestingPro, including the company's financial metrics and analyst predictions, offer valuable information to investors considering the potential impact of the company's strategic decisions on its future performance and valuation.
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