Leggett Q3 Earnings: What's In The Cards For LEG Stock?

Leading producer of engineered products, Leggett & Platt, Incorporated (NYSE:LEG) is slated to report third-quarter 2016 results on Oct 28. The big question facing investors now is whether the company will be able to continue with its positive earnings surprise streak in the quarter to be reported. In the trailing four quarters, it outperformed the Zacks Consensus Estimate by an average of 15.3%. Let’s see how things are shaping up for this announcement.

Zacks Model Shows Unlikely Earnings Beat

Our proven model does not conclusively show that Leggett is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. Leggett has an Earnings ESP of -3.23% as the Most Accurate estimate is 60 cents, while the Zacks Consensus Estimate is pegged at 62 cents. Leggett’s Zacks Rank #3 (Hold) increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

Factors Influencing this Quarter

Leggett is progressing well with its long-term strategy of achieving top-line growth of 4%–5% annually. Notably, the company has successfully completed the first two parts of its strategic plan, announced in Nov 2007 and is currently executing the third part of the plan.

Also, the company is making strategic investments in areas that provide it with a competitive edge, while exiting the underperforming ones. Alongside, it maintains a disciplined capital allocation and remains keen on boosting its shareholder value.

However, Leggett’s significant global presence exposes it to adverse currency movements. Moreover, stiff competition poses significant threats. While the company provided a conservative sales outlook for 2016, it continues to anticipate generating record earnings per share, robust operating margin and enhanced cash flows this year.

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Amazon.com, Inc. (NASDAQ:AMZN) has an Earnings ESP of +6.98% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Big 5 Sporting Goods Corp. (NASDAQ:BGFV) has an Earnings ESP of +3.33% and a Zacks Rank #2 (Buy).

L Brands, Inc. (NYSE:LB) has an Earnings ESP of +2.22% and a Zacks Rank #2.

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