Leggett & Platt Incorporated (LEG): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
We commend Leggett's consistent endeavors to keep itself on the growth trajectory through acquisitions that would help augment its top-line performance. Further, we remain impressed by the company's strong financial base, which enables it to make profitable ventures as well as return value to shareholders. We believe that the company's sustained focus on launching new products and divesting low-performing businesses bode well for growth. However, we are concerned about rising raw material costs, which have adversely impacted the company's margins over the past few quarters. Moreover, intense competition from global and regional players as well as exposure to foreign exchange rates may undermine the company's performance going forward. Thus, we are maintaining our long-term Neutral recommendation on the stock.

Overview:

Headquartered in Carthage, Missouri, Leggett and Platt Inc. is a global manufacturer that conceives, designs, and produces a wide variety of engineered components and products found in many homes, offices, retail stores, and automobiles. The company's most important product lines include components for residential furniture and bedding, retail store fixtures and point of purchase displays, as well as office furniture. In addition, Leggett makes non-automotive aluminum dye castings, drawn wire steel, automotive seat and lumber systems, as well as bedding industry machinery. The company has more than 140 production facilities located in 18 countries. The company reports its operating results under the following segments:

Residential Furnishings manufactures a range of components used by bedding and upholstered furniture manufacturers in their finished products. This division also supplies carpet cushions, adjustable beds, ornamental beds and geo components. In second-quarter 2013, this segment contributed approximately 42% to total external sales.

Specialized Products division produces lumber systems and wire components used by automotive seating manufactures. This segment also manufactures racks, and shelving and cabinets used to outfit service vans. In the quarter, this segment contributed nearly 20% to external sales.

Industrial Materials segment produces and provides steel rods, drawn steel wires, steel billets and welded steel tubing to its customers. In the second quarter, this segment contributed about 16% to external sales.

Commercial Fixturing & Components segment manufactures retail store fixtures and point of purchase displays. The segment also produces chair controls, bases and other components for office furniture manufacturers. In the last reported quarter, this segment contributed approximately 13% to external revenues.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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