Leggett & Platt is a diversified manufacturer that designs and produces a broad variety of engineered components and products that can be found in most homes and automobiles. The 138-year-old company comprises 15 business units, approximately 20,000 employees, and over 130 manufacturing facilities located in 18 countries.
Leggett & Platt is the leading U.S.-based manufacturer of:
a) bedding components;
b) automotive seat support and lumbar systems;
c) specialty bedding foams and private label finished mattresses;
d) components for home furniture and work furniture;
e) flooring underlayment;
f) adjustable beds; and
g) bedding industry machinery.
(Source: Leggett and Platt).
Best of all, Leggett and Platt is a Dividend King! 50 straight years of dividend increases!
Some metrics I look for –
Safety:
Dividend Safety Score – 70 – out of 99 – considered “safe”
Current Ratio (look for a number higher than 1, higher the better) – 1.50
Debt to Equity (lower the better) – 1.31
Payout Ratio – 55.80%
Estimated Earnings Growth Rate – 5 year – 5.20%
Dividend history:
Years of dividend increases: 50
Dividend growth rate – 5 year – 4.38%
Current yield: 4.42%
Current dividend: $1.68
Valuation:
DCF model: $52.24
P/E Mean Reversion: $59.57
Dividend Yield Theory: $47.86
Average of the three valuations – $53.22
Analyst Consensus Estimate (1 Year) – $51.25
Current price: $38.39 (12/21/21)
Potential discount – 28%
Commentary:
Fun fact – Leggett and Platt invented the steel coil bedspring in 1883! So you can thank them for your good nights sleep all these years. In fact, a large number of mattresses and vehicle seats have LEG products in them.
LEG is not a household name but we all have used their products. In addition to bedding and car seats, they produce office and hotel room furniture among many other products. They are constantly innovating and acquiring new businesses, like their recent acquisition of Elite Comfort Solutions, which specialized in foam technology for mattresses.
This company is in the consumer discretionary sector of the economy and their business growth and earnings is cyclical, which makes now a great time to buy as their business and stock price has dipped recently, as evidenced by their stock being 35% off recent 52 week highs.
This is a steady compounder and great dividend player. Their stock has underperformed the S&P 500 but then again the S&P 500 is grossly overvalued right now, where as LEG is a solid value today.
Let me know what you think!
Disclosure: I own LEG.