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Will Solid Residential Market Aid Leggett (LEG) Q1 Earnings?

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Leggett & Platt, Incorporated (LEG - Free Report) is slated to release first-quarter 2021 results on May 3, after market close.

In the last reported quarter, the company came up with better-than-expected earnings and net sales. Its adjusted earnings of 76 cents per share topped the Zacks Consensus Estimate by 8.6% and rose 11.8% from the year-ago quarter. The company’s net sales also topped the consensus mark by 2.9% and increased 3.2% from the prior-year level.

Notably, its earnings surpassed the consensus mark in each of the trailing seven quarters.

Trend in Estimate Revision

The Zacks Consensus Estimate for earnings for the quarter to be reported has moved upward to 41 cents per share from 40 cents over the past 30 days. The estimated figure indicates no change from the year-ago earnings. The consensus mark for revenues is $1.14 billion, suggesting 9% year-over-year growth.

Factors to Note

Leggett’s business is expected to have registered modest earnings and trade sales growth in first-quarter 2021. On a further encouraging note, improved demand in residential end markets is expected to have aided its top line. Also, encouraging bedding industry prospects — driven by a shift in consumer spending toward home products and favorable housing environment — might have added to the positives.

However, soft Aerospace industry and currency headwinds are likely to weigh on the results. Also, persistent supply chain constraints and inflation in commodity costs are likely to have somewhat put pressure on the bottom line.

Nonetheless, a rise in raw material-related selling price and focus on containment of fixed costs are expected to have somewhat offset the negatives.

The consensus estimate for Bedding Products’ trade sales (accounting for 47.6% of total 2020 revenues) is pegged at $551 million, indicating an increase of 12.3% from $490.6 million in first-quarter 2020.

For Specialized Products (comprising 20.8% of total revenues), the consensus estimate for the segment’s trade sales is pegged at $249 million, indicating an improvement of 6.2% year over year.

The consensus estimate for trade sales from the Furniture, Flooring & Textile Products segment (comprising 31.5% of total revenues) is pegged at $340 million, indicating 6.1% growth from the prior-year quarter.

Moreover, its systematic inorganic drive — which has been strongly contributing to top-line growth — should have given a meaningful boost to total sales.

What Our Quantitative Model Predicts

Our proven model does not conclusively predict an earnings beat for Leggett this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -0.81%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Leggett currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks With Favorable Combination

Here are some stocks from the Zacks Consumer Discretionary space that investors may consider, as our model shows that these have the right combination of elements to deliver an earnings beat this time around.

Wyndham Hotels & Resorts, Inc. (WH - Free Report) has an Earnings ESP of +2.82% and a Zacks Rank #1.

Fox Corporation (FOXA - Free Report) has an Earnings ESP of +13.64% and a Zacks Rank of #1.

DISH Network Corporation has an Earnings ESP of +3.64% and a Zacks Rank #2.

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