Will Leggett's (LEG) Q2 Earnings Break Its Positive Trend?

Leading engineered products’ manufacturer, Leggett & Platt, Incorporated (NYSE:LEG) , is slated to report its second-quarter 2016 results on Jul 29. In the last quarter, the company had delivered a positive earnings surprise of 8.6%. Notably, it has surpassed the Zacks Consensus Estimate in three of the last four quarters, with an average positive earnings surprise of 13.6%. Let’s see how things are shaping up for this announcement.

Factors Influencing this Quarter

While the company expects an improvement in unit volumes in 2016, largely driven by new product introductions and the ensuing market share gains, at the same time it anticipates the volume growth to be somewhat offset by 2% commodity deflation as well as a 2% reduction from the recently completed Steel Tubing divestiture. Also, Leggett’s significant operations in the international market expose it to adverse foreign currency fluctuations, which remain a threat to its performance. Hence, these factors keep us on the sidelines with regard to Leggett’s upcoming results.

Earnings Whispers

Our proven model does not conclusively show that Leggett is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below:

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 63 cents.

Zacks Rank: Leggett carries a Zacks Rank #4 (Sell). We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks that Warrant a Look

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:

Papa John's International Inc. (NASDAQ:PZZA) , expected to report earnings on Aug 2, currently has an Earnings ESP of +3.70% and a Zacks Rank #2.

Jack in the Box Inc. (NASDAQ:JACK) , expected to report earnings on Aug 3, currently has an Earnings ESP of +1.15% and a Zacks Rank #2.

Bloomin' Brands, Inc. (NASDAQ:BLMN) , slated to report earnings on Jul 29, currently has an Earnings ESP of +3.33% and a Zacks Rank #3.

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