What Happened?
Shares of manufacturing company Leggett & Platt (NYSE:LEG) fell 3.8% in the afternoon session as investors appeared to take profits following a significant rally in the previous session, which was prompted by the company's third-quarter earnings report.
The stock had surged over 13% the day before, despite the company reporting a 6% year-over-year drop in third-quarter sales to just over $1.0 billion and missing analysts' revenue forecasts. Sales in its largest unit, the bedding products segment, fell 10% due to weak demand. Adjusted earnings per share also came in slightly below expectations. The initial positive reaction seemed tied to the company narrowing its full-year revenue guidance to a range of $4.0 billion to $4.1 billion. However, this updated forecast still represented a 6% to 9% decline from the previous year, and the subsequent drop suggested investors were reassessing the mixed results.
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.
What Is The Market Telling Us
Leggett & Platt’s shares are quite volatile and have had 17 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 6 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 up 7.3% since the beginning of the year, but at $10.26 per share, it is still trading 21.4% below its 52-week high of $13.06 from November 2024. Investors who bought $1,000 worth of Leggett & Platt’s shares 5 years ago would now be looking at an investment worth $247.57.
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