In-Depth Case Analysis of Leggett & Platt (LEG): Research on the Replicability of InvestingPro's Stock Selection Methodology

According to brokerage API data, Leggett & Platt (LEG) indeed experienced a significant valuation repair rally in 2025:

• April 1 to December 27:
  Rose from $7.86 to $11.05, an increase of
  40.6%
  [0]
• Mid-April to December 27:
  Rose from approximately $6.95 to $11.05, an increase of
  59.0%
  [0]
• From annual lowest point
  (April 16, $6.56) to current: Increase of
  68.4%
  [0]
• From lowest point to highest point
  (December 1, $11.94): Peak increase reached
  82.0%
  [0]

[0]

• Price-to-Earnings Ratio (P/E):
  6.86x[0]
• Price-to-Book Ratio (P/B):
  1.58x[0]
• Return on Equity (ROE):
  27.49%[0]
• Net Profit Margin:
  5.38%[0]
• Current Ratio:
  2.15[0]
• 52-Week Price Range:
  $6.48 - $12.03[0]

• Median Target Price: $12.00 (8.6% upside potential from current price)[0]
• Rating Distribution: 28.6% Buy, 71.4% Hold[0]

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According to web search data, InvestingPro’s Fair Value model adopts a comprehensive evaluation framework of

[1][2]:

• Discounted Cash Flow (DCF) Model
• Dividend Discount Model (DDM)
• Relative Valuation Method
  (P/E, P/B, EV/EBITDA, etc.)
• Analyst Target Price Synthesis
• 52-Week Price Range Analysis

The platform uses high-quality data sources in partnership with

and employs modeling techniques similar to investment bank analysts[2].

According to brokerage API’s DCF analysis (based on 2024 financial report data):

• Conservative Scenario:
  Fair Value $58.37 (vs current price +428.2%)[0]
• Base Scenario:
  Fair Value $88.51 (vs current price +701.0%)[0]
• Optimistic Scenario:
  Fair Value $187.77 (vs current price +1599.3%)[0]

• Beta Coefficient:
  0.77 (lower than market volatility)[0]
• Risk-Free Rate:
  4.5%[0]
• Equity Risk Premium:
  7.0%[0]
• Weighted Average Cost of Capital (WACC):
  6.1%[0]

• Historical 5-Year Revenue CAGR: 0.6%[0]
• EBITDA Margin: 7.6%[0]
• Terminal Growth Rate: 2.0%-3.0%[0]

Valuation Dimension	Market Data	Analysis Interpretation
Absolute Valuation	P/E=6.86x	Far below S&P500 average (~20x), in historical low range[0]
Relative Valuation	P/B=1.58x	Close to book value, implying overly pessimistic market expectations[0]
Profitability	ROE=27.49%	High ROE with low valuation, typical feature of avoiding value traps[0]
Financial Health	Current Ratio=2.15	Sound financial condition, low debt repayment risk[0]
Technical Aspect	Price above 50-day/200-day moving average	Upward trend formed after April, technical strength improved[0]

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• In early 2025, the market was extremely pessimistic about the prospects of the furniture components industry
• LEG’s stock fell to a 52-week low of $6.48 (down over 80% from historical high)[0]
• P/E compressed to single digits, reflecting that the worst-case scenario was priced in

According to web search data, InvestingPro successfully predicted multiple similar cases (e.g., 45% drop in Bullish stock, 35% drop in Atai Life Sciences), indicating its model excels at identifying moments of [3][4].

• Mattress Products: 40.2% ($1.78B)[0]
• Furniture, Flooring and Textiles: 31.7% ($1.40B)[0]
• Professional Products: 28.1% ($1.24B)[0]

• US: 60.1%[0]
• Europe:15.1%[0]
• China:10.1%[0]

This diversified business structure provided resilience amid macro uncertainty, supporting valuation repair.

From the technical analysis chart[0]:

• After forming an important low on April 16, the stock price climbed steadily
• 20-day and 50-day moving averages formed a bullish alignment
• Moderate volume increase, showing institutional capital gradually entering

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• Reduce Single Model Bias:
  Cross-validation across multiple dimensions such as DCF, relative valuation, and analyst targets[1][2]
• Dynamic Adjustment Capability:
  Model parameters can be adjusted according to market environment and personal expectations[2]
• Data Quality Assurance:
  Uses authoritative data sources like S&P Global[2]

According to web searches, InvestingPro’s model recently successfully predicted:

• 45% drop in Bullish (BLSH)[3]
• 35% drop in Atai Life Sciences[4]
• Showing consistency in identifying
  extreme pricing errors

• Input Assumption Sensitivity:
  DCF is highly sensitive to growth rate and discount rate assumptions
  • LEG’s base scenario assumes only 0.6% revenue growth; if actual growth is lower, valuation will be sharply reduced[0]
• Historical Data Dependence:
  Models are based on historical financial data and may fail to capture structural changes
• Market Sentiment Factors:
  The time dimension of value repair is uncontrollable and may last for years

LEG’s 63% rally stemmed from the following special conditions:

1. Industry Cycle Bottom:
   Furniture components industry was at the trough of the business cycle
2. Extreme Valuation Level:
   P/E below 7x, in historical extreme range
3. Financial Soundness:
   High ROE (27.49%) with low debt
4. Macro Environment Change:
   Interest rate expectation shift favorable to value stocks

Dimension	Replicability	Explanation
Model Framework	★★★★☆	Multi-model valuation methodology can be systematically applied[1][2]
Data Acquisition	★★☆☆☆	Ordinary investors find it difficult to obtain S&P-level data[2]
Opportunity Identification	★★★☆☆	Limited number of extreme undervaluation cases, requiring broad coverage
Execution Discipline	★★★★☆	Quantitative signals can reduce emotional interference
Time Cost	★★☆☆☆	Value repair may take years
Comprehensive Score	★★★☆☆	Moderate Replicability

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The LEG case confirms the core principles of value investment:

• Market prices will return to intrinsic value in the long run
• Margin of safety provides downside protection
• Patience is the core competitiveness of value investors

Dimension	Traditional Value Investment	InvestingPro-Style Data-Driven
Analysis Tools	Financial report analysis + qualitative research	Multi-model quantitative framework[1][2]
Information Sources	Company announcements + industry research	Big data + analyst consensus[2]
Decision Basis	Subjective judgment + experience rules	Quantitative signals + probability assessment
Coverage Scope	Deep coverage of a few targets	Broad monitoring of the entire market[2]
Applicable Crowd	Professional investors	Institutional + individual investors[1]

1. Build Your Own Valuation Framework
   • Learn basic methods like DCF and relative valuation
   • Focus on multiple indicators such as P/E, P/B, and EV/EBITDA
   • Conduct cross-validation with analyst expectations

2. Focus on “Quality + Value” Dual Factors
   • The LEG case shows high ROE (27.49%) with low valuation is a strong signal[0]
   • Avoid pure “cheapness” and focus on financial health

3. Adopt Phased Position Building Strategy
   • Valuation repair time is uncertain; phased entry reduces timing risk
   • Set stop-loss discipline to prevent “value traps”

4. Use Tools to Assist Decision-Making
   • Reference quantitative signals from platforms like InvestingPro
   • But understand model assumptions and avoid mechanical application

• Reference multi-model integration frameworks to enhance decision robustness
• Combine deep fundamental research with quantitative signals to improve win rate
• Establish systematic value stock screening and tracking systems

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Although InvestingPro’s methodology performed well in cases like LEG, investors should note:

1. Historical Performance Does Not Represent Future Results:
   Each case has different macro environments and industry backgrounds
2. Model Risk:
   Any valuation model is based on assumptions; wrong assumptions may lead to misjudgment
3. Market Efficiency:
   As information spreads faster, extreme pricing errors may decrease
4. Execution Difficulty:
   Identifying opportunities is easy, but long-term holding requires strong psychological quality

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InvestingPro’s “undervalued” judgment on Leggett & Platt achieved significant gains, essentially due to the resonance of

triple factors. Its multi-model valuation methodology has , but success depends on the following key elements:

1. High-Quality Data Sources
   (S&P Global level)[2]
2. Multi-Model Cross-Validation Mechanism
   [1][2]
3. Ability to Identify Extreme Pricing Errors
   [3][4]
4. Sufficient Patience to Wait for Value Repair

For investors, understanding the logic behind this methodology is more important than mechanical replication. The essence of value investment is always

. Tools can assist decision-making but cannot replace in-depth research and independent judgment.

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[0] Jinling API Data - Stock Prices, Financial Indicators, DCF Valuation, Technical Analysis

[1] InvestingPro Support - “InvestingPro’s Fair Value” (https://pro.investing-support.com/hc/en-us/articles/4408902181137-InvestingPro-s-Fair-Value)

[2] InvestingPro Support - “InvestingPro’s Fair Value methodology” (https://www.investing-support.com/hc/en-us/articles/360017732117-InvestingPro-s-Fair-Value)

[3] Investing.com - “InvestingPro’s Fair Value model predicted Bullish’s 45% stock collapse” (https://www.investing.com/news/investment-ideas/investingpros-fair-value-model-predicted-bullishs-45-stock-collapse-93CH-4367171)

[4] Investing.com - “InvestingPro’s fair value model accurately predicted Atai’s 35% decline” (https://www.investing.com/news/investment-ideas/investingpros-fair-value-model-accurately-predicted-atais-35-decline-93CH-4422841)