Is LEG a good stock to buy?
Somnigroup's $12-per-share bid puts Leggett & Platt in takeover spotlight
We came across a bullish thesis on Leggett & Platt, Incorporated on Valueinvestorsclub.com by BookWithLegs. In this article, we will summarize the bulls' thesis on LEG. Leggett & Platt, Incorporated's share was trading at $10.21 as of March 17th. LEG's trailing P/E was 6.04 according to Yahoo Finance.
Leggett & Platt (LEG), a diversified manufacturer headquartered in Carthage, MO, faces challenging market conditions as its key end markets-including bedding (39%), flooring (21%), automotive seating (19%), and furniture (12%)-remain depressed relative to historical norms. This has put pressure on margins, particularly in the largest bedding segment, where YTD adjusted EBITDA margins have fallen to 7.7% from 16.3% in 2021, alongside an 11% decline in trade sales.
Despite this trough in performance, LEG presents a compelling "trough-on-trough" valuation opportunity, trading at 6.5x forward EBITDA versus a historical 10-year average of ~9.6x, with 2025 consensus EBITDA of $393 million, well below pre-downturn levels of $600-700 million.
The investment case has been significantly shaped by an unsolicited bid from Somnigroup (SGI), which offered $12 per share in stock on December 1 without financing contingencies or a shareholder vote, signaling serious strategic interest. SGI's acquisition would allow vertical integration of foam, innerspring, and adjustable base production, addressing LEG's margin challenges from underutilized capacity while consolidating SGI's control over the bedding value chain.
The move would also weaken Serta Simmons Bedding, LEG's largest customer and the second-largest U.S. bedding competitor, enhancing SGI's market dominance. Potential outcomes include a straightforward $12 deal, a negotiated premium closer to $15-16 per share reflecting LEG's historical ~10x EBITDA valuation, or no deal, in which case shares could revert to ~$9. The catalysts for LEG's stock are clear: a deal at $12, a negotiated higher offer, or a competing bid, all underpinned by SGI's strategic imperative and LEG's attractive trough valuation, providing a compelling risk/reward scenario for investors.
Previously, we covered a bullish thesis on Leggett & Platt, Incorporated (LEG) by DeepValue Capital in April 2025, which highlighted the company's turnaround potential through cost reductions, debt paydown, and strategic divestitures, positioning it for long-term upside. LEG's stock price has appreciated by approximately 48.61% since our coverage. BookWithLegs shares a similar view but emphasizes the SGI unsolicited bid, focusing on vertical integration synergies and potential deal outcomes as additional catalysts.
