Leggett & Platt (LEG): Assessing Valuation After Aerospace Sale and Upgraded Earnings Outlook

Leggett & Platt's recent string of announcements has given investors something to consider. After finalizing the sale of its aerospace unit, which is expected to bring in $250 million in after-tax proceeds, the company also raised its full-year earnings guidance and projected a higher range for EPS than previously targeted. For anyone tracking this manufacturer, these moves signal a shift in business focus and an effort to sharpen profitability, both of which could impact how the stock is valued going forward. The market has begun responding to these changes, with Leggett & Platt's share price showing momentum over the past month. While the longer-term picture remains challenging, with the stock down over the past year and several years, recent action suggests market participants are starting to factor in the company’s updated outlook and streamlined operations. This is happening against a backdrop of ongoing industry pressures, including Leggett's push for tougher regulation of imported mattress products. With a significant asset sale completed and higher earnings now forecasted, the big question is whether investors are looking at a fresh buying opportunity or if anticipated growth is already reflected in the share price.

Most Popular Narrative: 3.6% Overvalued

The latest consensus narrative views Leggett & Platt as slightly overvalued, with the fair value modestly below the current market price, based on its projected earnings growth and operational improvements.

“Recent and proposed enforcement of tariffs on imported mattresses and components, combined with aggressive targeting of transshipment and non-compliant imports, is expected to create a more level playing field for domestic producers. This should drive higher demand for Leggett & Platt's U.S.-made bedding components and steel rod/wire, contributing to stronger revenue and gross margin expansion as price pressures from foreign dumping recede.”

Curious about how tightening regulations and a revamped cost structure could change everything? This narrative’s fair value calculation is anchored on sharp margin expansion and fresh profit benchmarks. Details that might surprise even industry veterans. Want to know which figures are driving the story and how they could impact the future value? Find out what makes this valuation call so compelling.

Result: Fair Value of $9.67 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent weakness in residential bedding demand and aggressive industry discounting could undermine forecasts and present challenges for Leggett & Platt's expected margin expansion.

Find out about the key risks to this Leggett & Platt narrative.

Another View: Discounted Cash Flow Perspective

While the analyst consensus relies on company earnings and comparable ratios, our SWS DCF model provides a different perspective and suggests the shares are actually undervalued. Could the market be missing some hidden potential?

Look into how the SWS DCF model arrives at its fair value.

Stay updated when valuation signals shift by adding Leggett & Platt to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Leggett & Platt Narrative

If you have a different take or want to dig into the details yourself, you can shape your own Leggett & Platt story in just a few minutes: Do it your way.

A great starting point for your Leggett & Platt research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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