LEG

Leggett & Platt is a structurally shrinking furniture/bedding maker priced like one: revenue has fallen every year since 2021 ($5.15B → $4.06B), with 2025 trade sales down 7% on a 6% volume decline. The headline +146% net-income recovery to $235M is real but heavily flattered by one-offs — a $91M Aerospace divestiture gain, $35M insurance proceeds and $29M real-estate gains (~$93M pretax of net gains) — set against the prior years' $676M goodwill and $444M asset impairments. Strip those out and core EBIT is closer to ~$260M of the reported $356M. At a 6.9 P/E and 0.4 P/S the market already assumes the decline is permanent, so the bar is low.

The quality of the business is improving even as the top line falls: restructuring benefit and Section 232 steel-tariff-driven metal-margin expansion lifted EBIT from a $430M loss to a $356M profit, operating cash flow rose to $338M against just $57M of capex (~$281M free cash flow), and total debt was cut from $1.99B (2023) to $1.50B with cash up 68% to $587M. ROE screens at 23%, though that is partly a low, recently impaired equity base. The 80% dividend cut is the tell that management is prioritizing the balance sheet over the payout — prudent, but it ended LEG's long dividend-aristocrat status and signals the board does not see a quick demand recovery.