Linked here’s a detailed quantitative evaluation of Leggett & Platt, Inc. (LEG). Under are some highlights from the above linked evaluation:
Firm Description: Leggett & Platt Inc. makes a broad line of bedding and furnishings parts and different house, workplace and business furnishings, in addition to merchandise for non-furnishings markets.
Fair Value: In calculating truthful worth, I think about the NPV MMA Differential Truthful Worth together with these 4 calculations of truthful worth, see web page 2 of the linked PDF for an in depth description:
1. Avg. Excessive Yield Value
2. 20-Yr DCF Value
3. Avg. P/E Value
4. Graham Quantity
LEG is buying and selling at a reduction to 1.) and three.) above. Since LEG’s tangible guide worth is just not significant, a Graham quantity cannot be calculated. When additionally contemplating the NPV MMA Differential, the inventory is buying and selling at a 43.1% low cost to its calculated truthful worth of $33.69. LEG earned a Star on this part since it’s buying and selling at a good worth.
Dividend Analytical Data: On this part there are three attainable Stars and three key metrics, see web page 2 of the linked PDF for an in depth description:
1. Free Money Stream Payout
2. Debt To Whole Capital
3. Key Metrics
4. Dividend Development Charge
5. Years of Div. Development
6. Rolling 4-yr Div. > 15%
LEG earned one Star on this part for 3.) above. LEG earned a Star for having a suitable rating in no less than two of the 4 Key Metrics measured. The corporate has paid a money dividend to shareholders yearly since 1939 and has elevated its dividend funds for 52 consecutive years.
Dividend Income vs. MMA: Why would you assume the fairness threat and spend money on a dividend inventory should you might earn a greater return in a a lot much less dangerous cash market account (MMA) or Treasury bond? This part compares the incomes potential of this inventory with a high yield MMA. Two objects are thought of on this part, see web page 2 of the linked PDF for an in depth description:
1. NPV MMA Diff.
2. Years to > MMA
LEG earned a Star on this part for its NPV MMA Diff. of $3,302 This quantity is in extra of the $500 goal I search for in a inventory that has elevated dividends so long as LEG has. The inventory’s present yield of 9.61% exceeds the three.75% estimated 20-year common MMA fee.
Friends: The corporate’s peer group contains: Hooker Furnishings Corp. (HOFT) with a 4.0% yield, Flexsteel Industries Inc. (FLXS) with a 1.6% yield and Ethan Allen Interiors Inc. (ETD) with a 4.8% yield.
Conclusion: LEG earned one Star within the Truthful Worth part, earned one Star within the Dividend Analytical Knowledge part and earned one Star within the Dividend Earnings vs. MMA part for a complete of three Stars. This quantitatively ranks LEG as a 3-Star Maintain inventory.
Utilizing my D4L-PreScreen.xls mannequin, I decided the share worth would wish to extend to $37.38 earlier than LEG’s NPV MMA Differential decreased to the $500 minimal that I search for in a inventory with 52 years of consecutive dividend will increase. At that worth the inventory would yield 4.9%.
Resetting the D4L-PreScreen.xls mannequin and fixing for the dividend development fee wanted to generate the goal $500 NPV MMA Differential, the calculated fee is -7.3%. This dividend development fee is decrease than the 1.1% used on this evaluation, thus offering a margin of security. LEG has a risk rating of two.25 which classifies it as a Medium threat inventory.
Regardless of being a extremely cyclical firm, LEG has a protracted historical past of profitability and producing robust free money flows. LEG’s efficient value administration will assist the corporate to proceed growing its working money circulation. LEG’s free money circulation payout of 65% (down from 70%) is barely above my most, and its debt to complete capital of 62% (up from 58%) is above my most. The inventory is presently buying and selling nicely beneath my calculated truthful worth of $33.69. I’ve lately added to my place.
Disclaimer: Materials introduced right here is for informational functions solely. The above quantitative inventory evaluation, together with the Star score, is mechanically calculated and is predicated on historic info. The evaluation assumes the inventory will carry out sooner or later because it has prior to now. That is typically by no means true. Earlier than shopping for or promoting any inventory you ought to do your individual analysis and attain your individual conclusion. See my Disclaimer for extra info.
Full Disclosure: On the time of this writing, I used to be lengthy in LEG (0.7% of my Dividend Development Portfolio).
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Tags: LEG, HOFT, FLXS, ETH,
