Tags: Leggett | Platt | shareholders | LEG

Leggett & Platt Refocused on Giving Back to Shareholders

By    |   Wednesday, 29 Aug 2012 03:36 PM

Leggett & Platt (LEG) is refocused on giving back to shareholders amid slack demand as housing and commercial construction lag historical averages. Analysts see discipline at the managerial level feeding into support for the shares, if not growth for now.

Leggett & Platt was a pioneer of the steel coil bedspring and has become an international diversified manufacturer that conceives, designs and produces a wide range of engineered components and products found in many homes, offices, retail stores and automobiles.

The company is organized into 20 business units, which are divided into 10 groups under four segments: residential furnishings; commercial fixturing & components; industrial materials; and specialized products.

“Our goal is to achieve TSR (total shareholder return) in the top one-third of the S&P 500 over the long term through a balanced approach that employs all four TSR sources: revenue growth, margin expansion, dividends, and share repurchase,” management said in a recent filing.

“We monitor our TSR performance (relative to the S&P 500) on a rolling three-year basis. For the three-year measurement period that ended Dec. 31, 2011 we generated TSR of 21 percent per year, on average, which places us in the top 38 percent of the S&P 500. In addition, our TSR has exceeded that of the S&P 500 index for four consecutive years.”

Leggett & Platt has a market cap of $3.33 billion in a sector, household durables, where the average company size is $1.79 billion. Its trailing 12-month P/E ratio is 21.55 and its five-year projected price-to-earnings-growth (PEG) ratio is 1.44, compared to 6.86 for the sector.

Its projected earnings per share growth for the coming year is 14.89 percent, compared to a sector average of 21.76 percent.

Mixed demand


Analysts are positive on LEG, with buy or outperform calls from Raymond James and Jefferson Research.

“We continue to see mixed end-market demand with modest growth in residential furnishings, but declines in the commercial segments,” wrote Standard & Poor’s analysts on July 27, rating the stock a hold.

“Despite flat revenues, we project slightly higher operating margins on effective cost controls.”

Leggett & Platt next reports on Oct. 25.

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