Leggett & Platt, Inc. Had An Excellent 2015 And Is A Good Stock Going Into The New Year

| About: Leggett & (LEG)
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The company grew YoY earnings substantially with a small revenue increase as well.

As a dividend aristocrat, the stock has paid a nice dividend for over 30 years.

Going into an unpredictable 2016, this stock provides stability and income for conservative investors.

Leggett & Platt

Leggett & Platt, Inc. (NYSE:LEG) is a home furniture store that was founded all the way back in 1883. The company has a long tradition of dividend increases with consecutive annual increases going back all the way to 1972. Headquartered in Missouri, the company manufactures and sells all kinds of furniture and furniture components not just for use in the home but for offices, automobiles, and airplanes as well.

LEG had an excellent 2015 with the most recent earnings report showing outstanding quarterly earnings growth of 97% with 1.2% revenue growth to go along with it. The company is extremely efficient, which indicates it is being run by a talented management team. This is an attribute that is very valuable for long term investors looking for stability because knowing you can rely on the executive team allows you to sleep well at night knowing that your capital is in competent hands. This is why Warren Buffett looks very closely at management to make sure they know what they are doing and are trustworthy, then steps back and lets his money compound without interfering in the business.

It's easy to tell that management is talented when the company produced such high earnings growth numbers off of a small revenue increase of only 1.2% and has an ROE of 25% to go along with it. This shows clearly that costs are under control and the business is producing healthy amounts of cash flow, which is important for any business but perhaps even more so for a dividend aristocrat with a 3.17% yield. The yield may not be quite as high as other dividend aristocrats at the present time, but most other dividend payers don't have a PEG of 1.46, which shows that the company is growing at a healthy rate. This should give investors confidence going into a scary 2016 where we have gotten off to the worst start to the year in stock market history.

With a P/E of 21 and a forward P/E of only 17, the company looks fairly valued considering the growth rate and the fact that the average P/E for the overall market is still close to 20 even after last week's sell off. The company is priced right around average for the market but is producing above average results while paying a dividend to boot. Also, considering the fact that LEG sells furniture, which is a product in the consumer discretionary space that is benefiting from low gas prices, it is well positioned going forward while oil prices remain low.

So basically, LEG is priced for value while paying a decent dividend, operates in a favorable macro economic environment for the industry, is growing at a healthy pace, and has excellent management. In a year when it will be important to pick winning individual stocks, LEG looks like a safe bet for the conservative investor looking for both income and growth.

Finally, over 12% of the company's outstanding shares are owed by insiders, which is usually a strong indication that management has the shareholder's interests in mind when making decisions. While surprising, this is not always the case as many executive teams earn very high salaries and few stock options giving them no incentive to try to bolster the stock and reward shareholders. This is clearly not the case when management is deeply invested in the outcomes of the firm, which should make investors feel good while putting their hard earned money into the business.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.