Value
9.4/10data confidence 67%| Component | Sub-score |
|---|---|
| P/E | 9.8 |
| P/S | 10.0 |
| EV/EBITDA | 7.8 |
| Fwd P/E | 9.5 |
- ▸Forward P/E: 8.8x
- ▸Attractively valued
LEG · Why this verdict
Why Leggett & Platt (LEG) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score4.9/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Leggett & Platt trades at a deeply discounted valuation relative to peers, but consecutive earnings misses, declining revenue, and a dividend payout that exceeds earnings by a wide margin raise serious questions about whether that discount represents opportunity or a value trap.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company has missed consensus estimates in each of the two most recent quarters, including a -38% shortfall in the latest print, and revenue is declining roughly 10% year over year — signaling that the business is still shrinking. Earnings | The thesis is challenged if the next quarterly report (due in approximately 44 days) produces another miss and revenue declines persist. | ↑Improving |
| CounterThe oldest data point in the four-quarter history shows a 36% beat, suggesting the business can periodically outperform; the most recent miss may partly reflect one-time charges rather than structural erosion. | ||
The dividend payout ratio is reported at 186% of earnings, meaning the company is paying out substantially more in dividends than it earns — a condition that is difficult to sustain without either cutting the dividend or taking on additional debt. Catalyst breakdown | If free cash flow and earnings recover over the next four quarters such that the payout ratio compresses meaningfully, dividend safety concerns would ease and the stock could re-rate higher. | ↑Improving |
| CounterManagement may be intentionally maintaining the dividend through the cycle to preserve income-investor support, accepting temporarily elevated leverage rather than signaling distress via a cut. | ||
The shares trade at a forward earnings multiple near 10x — attractively valued in absolute and peer-relative terms, offering a potential margin of safety of roughly 55% to intrinsic value estimates. Bull case | Over 12 months, the price-to-earnings multiple expands toward the peer average as earnings stabilize, with the stock approaching or exceeding the near-term resistance target. | →Stable |
| CounterA cheap multiple is warranted when earnings are unreliable; two consecutive misses and a -38% surprise in the most recent quarter suggest the 'E' in the P/E ratio is still moving lower, making today's multiple less attractive than it appears. | ||
Short interest stands at 17% of the float and the put-to-call ratio is exceptionally elevated at 6.83, indicating that a significant portion of market participants are positioned for further downside — a technical overhang that can suppress any price recovery. Key risks | A sustained re-rating would require short interest to fall below 10% and the put-to-call ratio to normalize below 2.0 over the next two quarters. | ↓Deteriorating |
| CounterExtreme put-to-call readings can precede short squeezes if earnings stabilize; heavy bearish positioning means any positive catalyst could trigger forced covering and amplify upside. | ||
The company has missed consensus estimates in each of the two most recent quarters, including a -38% shortfall in the latest print, and revenue is declining roughly 10% year over year — signaling that the business is still shrinking.
↑ImprovingEarnings
- Expectation
- The thesis is challenged if the next quarterly report (due in approximately 44 days) produces another miss and revenue declines persist.
CounterThe oldest data point in the four-quarter history shows a 36% beat, suggesting the business can periodically outperform; the most recent miss may partly reflect one-time charges rather than structural erosion.
The dividend payout ratio is reported at 186% of earnings, meaning the company is paying out substantially more in dividends than it earns — a condition that is difficult to sustain without either cutting the dividend or taking on additional debt.
↑ImprovingCatalyst breakdown
- Expectation
- If free cash flow and earnings recover over the next four quarters such that the payout ratio compresses meaningfully, dividend safety concerns would ease and the stock could re-rate higher.
CounterManagement may be intentionally maintaining the dividend through the cycle to preserve income-investor support, accepting temporarily elevated leverage rather than signaling distress via a cut.
The shares trade at a forward earnings multiple near 10x — attractively valued in absolute and peer-relative terms, offering a potential margin of safety of roughly 55% to intrinsic value estimates.
→StableBull case
- Expectation
- Over 12 months, the price-to-earnings multiple expands toward the peer average as earnings stabilize, with the stock approaching or exceeding the near-term resistance target.
CounterA cheap multiple is warranted when earnings are unreliable; two consecutive misses and a -38% surprise in the most recent quarter suggest the 'E' in the P/E ratio is still moving lower, making today's multiple less attractive than it appears.
Short interest stands at 17% of the float and the put-to-call ratio is exceptionally elevated at 6.83, indicating that a significant portion of market participants are positioned for further downside — a technical overhang that can suppress any price recovery.
↓DeterioratingKey risks
- Expectation
- A sustained re-rating would require short interest to fall below 10% and the put-to-call ratio to normalize below 2.0 over the next two quarters.
CounterExtreme put-to-call readings can precede short squeezes if earnings stabilize; heavy bearish positioning means any positive catalyst could trigger forced covering and amplify upside.
Per-dimension breakdown
Quality
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 7.5 |
| ROA | 2.8 |
| Gross margin | 0.0 |
| Op margin | 3.4 |
| Net margin | 2.8 |
| Current ratio | 8.1 |
| FCF quality | 7.5 |
| Moat | 4.2 |
| Piotroski F | 4.4 |
- ▸No competitive moat
Growth
0.6/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 1.1 |
| EPS growth | 0.0 |
- ▸Declining revenue: -6%
Momentum
1.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.5 |
| MACD | 2.1 |
| OBV | 1.0 |
| MA position | 2.2 |
| Volume | 0.0 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA but MA still rising (+2.6%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 7.0 |
| Analyst rating | 5.0 |
| Price target | 7.5 |
- ▸LLM news sentiment: +0.40 (n=1)
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
4.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.7 |
| quality rank | 6.2 |
| growth rank | 2.3 |
- ▸Attractive P/E vs peers
Technical
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 7.9 |
| support resistance | 8.1 |
| 52w position | 5.1 |
Risk (lower is worse)
2.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 1.6 |
| days to cover | 2.6 |
| volatility | 0.3 |
| put call | 0.0 |
| implied vol | 0.0 |
| max pain risk | 3.0 |
| beta | 8.5 |
| debt equity | 4.0 |
- ▸High short interest justified: 19%
- ▸Elevated put/call: 3.50
- ▸High IV: 88%
- ▸Above max pain $2
Catalyst
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 1.1 |
| earnings timing | 5.0 |
| surprise avg | 3.7 |
| dividend safety | 6.8 |
| news activity | 5.0 |
- ▸Earnings concerns: 1B/2M
How the verdict was assembled
Engine trigger
Extreme risk factors.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:RISK_FLOORPassed (5)
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:75d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:1.8<4.5
- ASYMMETRY:0.1<1.5@spot
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.08
Upside
+0.8%
Downside
9.7%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeInst Constrain — Small cap ($1.3B) below institutional reach
SuitabilityAggressive — MCap $1.3B<$5B
Investment implication
The SELL_IF_HOLDING verdict reflects the MOMENTUM gate's 1.8<4.5 outcome against Value at 9.4 and asymmetric R:R of 0.08.
The strongest dimensions are Value at 9.4, Insider at 7.3, and Technical at 7.0; the weakest are Growth at 0.6, Momentum at 1.8, and Risk (lower is worse) at 2.5. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of 0.08 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Deep Value Discount
Trip ifForward P/E multiple compresses below 8x for 2 consecutive quarters, suggesting the earnings base is eroding faster than the discount widens.
- P2Earnings Deterioration Streak
Trip ifEPS surprise falls below -10% for 2 consecutive quarters.
- P3Dividend Sustainability Risk
Trip ifDividend payout ratio rises above 250% for 2 consecutive quarters without a dividend cut announcement.
- P4Elevated Short And Options Pressure
Trip ifShort interest rises above 22% of float.