Value
9.1/10data confidence 67%| Component | Sub-score |
|---|---|
| P/E | 9.6 |
| P/S | 10.0 |
| EV/EBITDA | 7.3 |
| Fwd P/E | 9.2 |
- ▸Forward P/E: 10.9x
- ▸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 score5.1/10
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. | →Stable |
| 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. | →Stable |
| 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.
→StableEarnings
- 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.
→StableCatalyst 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
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 8.4 |
| ROA | 2.6 |
| Gross margin | 0.0 |
| Op margin | 2.0 |
| Net margin | 2.8 |
| Current ratio | 8.0 |
| FCF quality | 7.6 |
| Moat | 4.2 |
| Piotroski F | 4.4 |
- ▸Excellent ROE: 25%
- ▸No competitive moat
Growth
0.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 0.0 |
| EPS growth | 0.0 |
- ▸Declining revenue: -10%
Momentum
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 8.1 |
| MACD | 2.1 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 0.9 |
- ▸Uptrend pullback (RSI 34) - buy opportunity
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 6.1 |
| erm sentiment | 5.0 |
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
4.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.8 |
| quality rank | 6.5 |
| growth rank | 0.8 |
- ▸Attractive P/E vs peers
Technical
7.8/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 8.3 |
| support resistance | 8.6 |
| 52w position | 6.6 |
Risk (lower is worse)
4.0/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 1.7 |
| days to cover | 3.2 |
| volatility | 2.9 |
| beta | 8.6 |
| debt equity | 3.8 |
- ▸High short interest justified: 18%
- ▸Concentration risks: 1 HIGH, 3 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
3.4/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| dividend safety | 6.8 |
- ▸Earnings concerns: 0B/3M
- ▸Earnings in 9 days
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (5)
- MOMENTUM:5.4>=4.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-1.1=NEGATIVE
Warning (3)
- MOMENTUM:5.4<5.5 (soft — BUY_NOW allowed but watch)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
- EARNINGS_PROXIMITY:9d<=14d (soft)
Reward-to-Risk
-1.14
Upside
-8.7%
Downside
7.7%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeInst Constrain — Small cap ($1.5B) below institutional reach
SuitabilityAggressive — MCap $1.5B<$5B
Investment implication
The F-path SELL output reflects an overall score of 4.1 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Value at 9.1) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-1.1=NEGATIVE) reinforce the read. Current asymmetry R:R is -1.14 — supplementary context, not the trigger for this path.
The strongest dimensions are Value at 9.1, Technical at 7.8, and Insider at 7.3; the weakest are Growth at 0.0, Catalyst at 3.4, and Risk (lower is worse) at 4.0. The V9 engine flagged 1 failed gate with 3 warnings, producing an asymmetric reward-to-risk of -1.14 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.