Leggett & Platt (LEG) Soars 16.88% on Aerospace Divestiture, Debt Reduction Drive

Leggett & Platt Inc. (LEG) surged 16.88% intraday on Oct. 29, hitting a peak not seen so far this month. The rally followed two consecutive days of gains, with the stock climbing 16.12% in that span. The move reflects investor optimism around the company’s strategic shift and debt reduction efforts, despite broader economic headwinds.

The stock’s jump came after the firm reported mixed third-quarter results, with revenue falling 5.9% year-over-year to $1.04 billion but topping estimates. A key catalyst was the completed divestiture of its Aerospace business, a step to sharpen focus on higher-margin core segments like Bedding Products and Specialized Products. The transaction, which generated $296 million in debt reduction, also narrowed full-year revenue guidance to $4.0-$4.1 billion, signaling tighter operational discipline. While Bedding and Furniture segments faced soft demand, the company’s operating margin expanded to 16.5% in Q3, up from 7.1% in the prior-year period, driven by cost-cutting measures and restructuring.

Despite these gains, Leggett & Platt faces lingering challenges. Bedding and Furniture sales declined 11.2% and 6.8% year-over-year, respectively, pressured by tariffs, inflation, and weak housing markets. Management acknowledged macroeconomic risks, including consumer confidence and housing trends, which could delay a recovery. The company’s trailing twelve-month revenue growth remains negative (-4.9%), and its Altman Z-Score of 2.77 suggests financial stress. However, the stock’s low P/E ratio (8.91) and P/S ratio (0.3) have fueled speculation of undervaluation. Analysts note that execution of the restructuring plan and innovation in core markets will be critical to sustaining momentum, even as near-term uncertainties persist.