Manufacturing company Leggett & Platt (NYSE:LEG) met Wall Street’s revenue expectations in Q2 CY2025, but sales fell by 6.3% year on year to $1.06 billion. The company’s outlook for the full year was close to analysts’ estimates with revenue guided to $4.15 billion at the midpoint. Its non-GAAP profit of $0.30 per share was in line with analysts’ consensus estimates.
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Leggett & Platt (LEG) Q2 CY2025 Highlights:
- Revenue: $1.06 billion vs analyst estimates of $1.06 billion (6.3% year-on-year decline, in line)
- Adjusted EPS: $0.30 vs analyst estimates of $0.31 (in line)
- Adjusted EBITDA: $105.3 million vs analyst estimates of $104.2 million (10% margin, 1.1% beat)
- The company reconfirmed its revenue guidance for the full year of $4.15 billion at the midpoint
- Management reiterated its full-year Adjusted EPS guidance of $1.10 at the midpoint
- Operating Margin: 8.5%, up from -54.4% in the same quarter last year
- Market Capitalization: $1.31 billion
President and CEO Karl Glassman commented, "We are pleased to report another quarter of profitability improvement. We further strengthened our balance sheet by reducing debt and favorably amending our revolving credit facility. We also remain on track to complete the sale of our Aerospace business this year. The continued progress on our strategic initiatives is a direct reflection of the dedication and talent of our employees."
Company Overview
Founded in 1883, Leggett & Platt (NYSE:LEG) is a diversified manufacturer of products and components for various industries.
Revenue Growth
A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Unfortunately, Leggett & Platt struggled to consistently increase demand as its $4.24 billion of sales for the trailing 12 months was close to its revenue five years ago. This wasn’t a great result and suggests it’s a low quality business.
Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Leggett & Platt’s recent performance shows its demand remained suppressed as its revenue has declined by 7.2% annually over the last two years. 
Leggett & Platt also breaks out the revenue for its three most important segments: Bedding, FF&T, and Specialized Products, which are 37%, 28.7%, and 34.3% of revenue. Over the last two years, Leggett & Platt’s Bedding (mattresses and foundations) and FF&T (sofa parts and tiles ) revenues averaged year-on-year declines of 12.1% and 7.5% while its Specialized Products revenue (automobile components) averaged 1.3% growth. 
This quarter, Leggett & Platt reported a rather uninspiring 6.3% year-on-year revenue decline to $1.06 billion of revenue, in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. Although this projection indicates its newer products and services will catalyze better top-line performance, it is still below the sector average.
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Operating Margin
Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.
Leggett & Platt’s operating margin has been trending up over the last 12 months, but it still averaged negative 6.3% over the last two years. This is due to its large expense base and inefficient cost structure.
This quarter, Leggett & Platt generated an operating margin profit margin of 8.5%, up 63 percentage points year on year. This increase was a welcome development, especially since its revenue fell, showing it was more efficient because it scaled down its expenses.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Sadly for Leggett & Platt, its EPS declined by 11.8% annually over the last five years while its revenue was flat. However, its operating margin actually improved during this time, telling us that non-fundamental factors such as interest expenses and taxes affected its ultimate earnings.
In Q2, Leggett & Platt reported adjusted EPS at $0.30, up from $0.29 in the same quarter last year. Despite growing year on year, this print slightly missed analysts’ estimates. Over the next 12 months, Wall Street expects Leggett & Platt’s full-year EPS of $1.07 to grow 8.6%.
Key Takeaways from Leggett & Platt’s Q2 Results
It was good to see LEG beat analysts' EBITDA expectations this quarter. On the other hand, its Specialized Products revenue and EPS fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded up 2.4% to $9.76 immediately following the results.
Is Leggett & Platt an attractive investment opportunity right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.