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Why Leggett & Platt Stock Jumped 12% Early Tuesday

What happened

Shares of Leggett & Platt (NYSE: LEG), a manufacturer of residential, industrial, furniture, and specialized products, jumped as much as 12% Tuesday morning after the company released better than expected third-quarter results.

So what

Sales grew 14% during the third quarter to $1.24 billion, topping analysts' estimates by roughly $30 million. Adjusted earnings per share checked in at $0.76, beating analysts' estimates of $0.67. But there are a couple of things to note about results and guidance, which we'll get to in a moment.

In a press release, CEO Karl G. Glassman said, "Sales were stronger in Automotive, U.S. Spring, and Work Furniture, but this improvement was more than offset by planned lower volume from business exited in Fashion Bed and Home Furniture and weak trade demand in the Industrial Products segment."

Man looking at a mattress wire frame.

Leggett & Platt is a leading producer of drawn steel wire. Image source: Getty Images.

Now what

At first glance, results appear strong, but the reason is acquisitions. Earlier in 2019, Leggett completed its deal for Elite Comfort Solutions for $1.25 billion, and it's the primary driving force behind double-digit sales growth and adjusted EBIT improvement, compared with the prior year.

Investors looking over the press release will also notice that management raised full-year adjusted EPS guidance to a range of $2.48 to $2.63 per share. But it's worth noting that original guidance during the first quarter of 2019 forecast a full-year range between $2.45 to $2.65 per share, which was then lowered to an adjusted EPS range of $2.40 to $2.60 during the second quarter. All in all, while investing in consumer goods stocks isn't easy, the third quarter was a step forward for the company's financial results. 

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Daniel Miller has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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

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