Leggett & Platt, Inc.'s
) fourth-quarter 2011 earnings of $0.22 per share were up from the
prior-period level, but we believe it was inorganic growth
primarily spurred by the company's share buyback program. Moreover,
during the quarter, Leggett's gross margin contracted 90 basis
points to 16.7% due to higher input costs.
Further, the company's operating margin shriveled 470 basis points
to 1.5% due to increased selling and administrative expenses. we
believe that intense competition from global and regional players,
volatility in raw material prices and exposure to adverse foreign
currency translations may undermine the company's future growth
prospects and profitability.
Currently, we are maintaining a long-term Underperform
recommendation on the stock. Our target price of $20.00, 15.3x 2012
EPS, reflects this view.
LEGGETT & PLATT (
): Free Stock Analysis Report
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