Leggett & Platt (LEG) & La-Z-Boy (LZB) Critical Analysis

Leggett & Platt (NYSE: LEG) and La-Z-Boy (NYSE:LZB) are both consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, earnings, valuation, institutional ownership, risk and dividends.

Volatility and Risk

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Leggett & Platt has a beta of 0.86, suggesting that its share price is 14% less volatile than the S&P 500. Comparatively, La-Z-Boy has a beta of 0.85, suggesting that its share price is 15% less volatile than the S&P 500.

Dividends

Leggett & Platt pays an annual dividend of $1.44 per share and has a dividend yield of 3.3%. La-Z-Boy pays an annual dividend of $0.48 per share and has a dividend yield of 1.6%. Leggett & Platt pays out 58.5% of its earnings in the form of a dividend. La-Z-Boy pays out 27.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Leggett & Platt has increased its dividend for 46 consecutive years. Leggett & Platt is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Leggett & Platt and La-Z-Boy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Leggett & Platt 7.42% 29.44% 10.12%
La-Z-Boy 4.74% 13.96% 9.53%

Earnings and Valuation

This table compares Leggett & Platt and La-Z-Boy’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Leggett & Platt $3.94 billion 1.47 $292.60 million $2.46 17.86
La-Z-Boy $1.52 billion 0.94 $85.92 million $1.73 17.49

Leggett & Platt has higher revenue and earnings than La-Z-Boy. La-Z-Boy is trading at a lower price-to-earnings ratio than Leggett & Platt, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

73.7% of Leggett & Platt shares are held by institutional investors. Comparatively, 88.6% of La-Z-Boy shares are held by institutional investors. 1.5% of Leggett & Platt shares are held by insiders. Comparatively, 3.2% of La-Z-Boy shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations and price targets for Leggett & Platt and La-Z-Boy, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Leggett & Platt 0 3 3 0 2.50
La-Z-Boy 0 2 1 0 2.33

Leggett & Platt presently has a consensus target price of $55.20, suggesting a potential upside of 25.65%. La-Z-Boy has a consensus target price of $33.00, suggesting a potential upside of 9.09%. Given Leggett & Platt’s stronger consensus rating and higher probable upside, analysts clearly believe Leggett & Platt is more favorable than La-Z-Boy.

Summary

Leggett & Platt beats La-Z-Boy on 14 of the 17 factors compared between the two stocks.

About Leggett & Platt

Leggett & Platt, Incorporated designs and produces various engineered components and products worldwide. It operates through four segments: Residential Products, Furniture Products, Industrial Products, and Specialized Products. The Residential Products segment offers innersprings, wire forms, and machines to shape wire into various types of springs; industrial sewing/finishing machines, conveyor lines, mattress packaging, and glue-drying equipment, as well as quilting machines; and structural fabrics, carpet cushions, and geo components. It serves manufacturers of finished bedding, upholstered furniture, packaging, filtration, and draperies; retailers and distributors of carpet cushions; and contractors, landscapers, road construction companies, and government agencies using geo components. The Furniture Products segment offers molded plywood components; bases, columns, back rests, control devices, and casters and frames; private-label finished furniture; beds and bed frames; adjustable beds; and steel mechanisms and hardware, and springs and seat suspensions. It serves upholstered and office furniture manufacturers; department stores and big box retailers; e-commerce retailers; and mattress and furniture retailers. The Industrial Products segment offers drawn wires, bedding and furniture components, automotive seat suspension systems, and steel rods. It serves packaging and baling companies, mechanical spring manufacturers, and wire distributors. The Specialized Products segment offers mechanical and pneumatic lumbar support and massage systems, seat suspension systems, motors and actuators, and cables; titanium, nickel, and stainless steel tubing, formed tube, and tube assemblies; and engineered hydraulic cylinders. It serves automobile and mobile equipment OEMs, and aerospace suppliers. The company sells its products through sales representatives and distributors. Leggett & Platt, Incorporated was founded in 1883 and is headquartered in Carthage, Missouri.

About La-Z-Boy

La-Z-Boy Incorporated manufactures, markets, imports, exports, distributes, and retails upholstery furniture products, accessories, and casegoods furniture products in the United States, Canada, and internationally. It operates through Upholstery, Casegoods, and Retail segments. The Upholstery segment manufactures and imports upholstered furniture, such as recliners and motion furniture, sofas, loveseats, chairs, sectionals, modulars, ottomans, and sleeper sofas. This segment sells its products directly to La-Z-Boy Furniture Galleries stores, operators of Comfort Studios and England custom comfort center locations, dealers, and other independent retailers. The Casegoods segment imports, markets, and distributes casegoods/wood furniture, including bedroom sets, dining room sets, entertainment centers, and occasional pieces, as well as manufactures upholstered furniture. This segment sells its products to dealers, La-Z-Boy Furniture Galleries stores, and other independent retailers under the American Drew, Hammary, and Kincaid brands. The Retail segment sells upholstered furniture, casegoods, and other accessories to the end consumer through its retail network. This segment operates a network of 347 La-Z-Boy Furniture Galleries stores and 557 Comfort Studio locations, as well as in-store programs with 527 outlets in Kincaid and England. La-Z-Boy Incorporated also produces reclining chairs; and manufactures and distributes residential furniture. The company was formerly known as La-Z-Boy Chair Company and changed its name to La-Z-Boy Incorporated in 1996. La-Z-Boy Incorporated was founded in 1927 and is based in Monroe, Michigan.

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