What Happened?
Shares of manufacturing company Leggett & Platt (NYSE:LEG)
fell 12% in the morning session after the company reported second-quarter results that showed a drop in sales and a weak forecast, with a broader market downturn adding to the negative sentiment. The furniture and bedding component maker's sales decreased by 6% from the prior year. While adjusted earnings per share ticked up slightly, the figure missed some analyst estimates. The company's outlook also concerned investors, as it expected a mid-teens volume decline in its Bedding Products segment. Leggett & Platt did maintain its full-year guidance, but that forecast still projected an annual sales drop. The negative report landed amidst a wider market sell-off, which was triggered by a weak U.S. jobs report and the announcement of new tariffs.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Leggett & Platt? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Leggett & Platt’s shares are quite volatile and have had 16 moves greater than 5% over the last year. But moves this big are rare even for Leggett & Platt and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock gained 29.7% on the news that the company reported decent first-quarter 2025 results: its revenue was in line with Wall Street's targets, while its EPS topped expectations. Despite the top-line decline, margins improved. That margin expansion, combined with cost control, helped adjusted EPS to clear analyst expectations.
Overall, this quarter was mixed, but considering low expectations, this was a good quarter.
Leggett & Platt is down 14.3% since the beginning of the year, and at $8.21 per share, it is trading 41.9% below its 52-week high of $14.12 from September 2024. Investors who bought $1,000 worth of Leggett & Platt’s shares 5 years ago would now be looking at an investment worth $206.68.
Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.