What Happened?
Shares of manufacturing company Leggett & Platt (NYSE: LEG) fell 2.9% in the afternoon session after the stock continued to retreat as the company reported third-quarter financial results that revealed softer sales, overshadowing a significant jump in net earnings. Although net earnings rose to $127.1 million from $44.9 million in the same period a year ago, this was largely due to one-time events. The company recorded an $86.8 million gain from the sale of its Aerospace Products Group, along with other real estate gains and insurance proceeds. However, investors appeared to focus on the decline in core business activity, as net trade sales fell to $1.04 billion from $1.10 billion the previous year. The market's reaction suggested concern about the company's underlying operational performance, looking past the profits generated by asset sales.
The shares closed the day at $9.34, down 1.9% from previous close.
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What Is The Market Telling Us
Leggett & Platt’s shares are quite volatile and have had 19 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 previous big move we wrote about was 2 days ago when the stock dropped 3.8% on the news that 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.
Leggett & Platt is down 2.4% since the beginning of the year, and at $9.34 per share, it is trading 28.5% 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 $214.61.
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