Bear of the Day: Leggett & Platt (LEG)

Leggett & Platt (LEG) has struggled over the past year, with shares falling by more than a third as slowing sales and an over leveraged balance sheet weigh on investor confidence. The challenges have left the stock under significant pressure, and the outlook remains clouded until management can demonstrate a credible turnaround.

Leggett & Platt is a diversified manufacturer best known for its bedding components, furniture products, automotive seating systems, and industrial materials. Its operations span across residential, commercial, and industrial end markets, giving it broad exposure but also leaving it vulnerable to cyclical downturns in housing, consumer spending, and manufacturing.

Adding to the bearish case, analysts have recently begun lowering earnings forecasts, reflecting both near-term weakness and concerns about the company’s financial flexibility. These downward revisions have pushed LEG into a low Zacks Rank, highlighting negative estimate momentum. Until Leggett & Platt can stabilize its operations, reduce debt levels, and return to consistent earnings growth, the stock is likely to remain under pressure and should be avoided by investors looking for stronger opportunities

Shares of Leggett & Platt Decline Following Downgrades

Analysts have unanimously lowered earnings estimates for LEG over the past 60 days. Current year projections are down 5.4%, while next year’s estimates have fallen nearly 10%, earning the stock a Zacks Rank #5 (Strong Sell).

Sales are expected to decline 7% this year and remain flat in 2026, while earnings are projected to be flat this year with only modest growth of 4.7% next year. The outlook reflects continued challenges for the business and limited near-term catalysts.

Technically, the stock has also failed to inspire confidence. While shares managed to recover from their April lows, the bounce quickly lost steam. Following a weak earnings reaction, where LEG missed both top and bottom line expectations, price action has slipped into another period of consolidation, and the chart now suggests the stock may be on the verge of rolling over again

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Should Investors Avoid LEG Stock?

At this stage, the risks surrounding Leggett & Platt outweigh the potential rewards. The company faces a difficult combination of slowing sales, weak earnings momentum, and an overleveraged balance sheet that limits its flexibility. Analyst downgrades reinforce the bearish outlook, with estimate revisions pointing to further near-term pressure rather than recovery.

From a technical standpoint, the stock has also failed to generate sustained upside. After a brief rebound off the April lows, shares rolled over again following disappointing earnings results, leaving the chart tilted back toward the downside.

Until management can deliver a clear plan to strengthen the balance sheet and restore consistent growth, LEG remains a stock to avoid. Investors would be better served focusing on companies with healthier fundamentals, positive estimate momentum, and clearer technical strength.

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This article originally published on Zacks Investment Research (zacks.com).

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