Leggett & Platt (NYSE:LEG) versus Bassett Furniture Industries (NASDAQ:BSET) Critical Review

Bassett Furniture Industries (NASDAQ:BSET) and Leggett & Platt (NYSE:LEG) are both small-cap consumer discretionary companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, valuation, dividends, risk, profitability and earnings.

Profitability

This table compares Bassett Furniture Industries and Leggett & Platt’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bassett Furniture Industries	2.35%	4.67%	2.33%
Leggett & Platt	5.38%	17.38%	3.59%

Volatility and Risk

Bassett Furniture Industries has a beta of 1.01, suggesting that its stock price is 1% more volatile than the S&P 500. Comparatively, Leggett & Platt has a beta of 0.72, suggesting that its stock price is 28% less volatile than the S&P 500.

Earnings and Valuation

This table compares Bassett Furniture Industries and Leggett & Platt”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bassett Furniture Industries	$329.92 million	0.40	-$9.69 million	$0.90	16.79
Leggett & Platt	$4.38 billion	0.33	-$511.50 million	$1.03	10.30

Bassett Furniture Industries has higher earnings, but lower revenue than Leggett & Platt. Leggett & Platt is trading at a lower price-to-earnings ratio than Bassett Furniture Industries, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

54.4% of Bassett Furniture Industries shares are owned by institutional investors. Comparatively, 64.2% of Leggett & Platt shares are owned by institutional investors. 7.3% of Bassett Furniture Industries shares are owned by insiders. Comparatively, 2.1% of Leggett & Platt shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

Bassett Furniture Industries pays an annual dividend of $0.80 per share and has a dividend yield of 5.3%. Leggett & Platt pays an annual dividend of $0.20 per share and has a dividend yield of 1.9%. Bassett Furniture Industries pays out 88.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Leggett & Platt pays out 19.4% of its earnings in the form of a dividend. Bassett Furniture Industries has raised its dividend for 4 consecutive years. Bassett Furniture Industries is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of current ratings and price targets for Bassett Furniture Industries and Leggett & Platt, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bassett Furniture Industries	0	2	0	1	2.67
Leggett & Platt	1	4	0	0	1.80

Leggett & Platt has a consensus price target of $9.67, indicating a potential downside of 8.87%. Given Leggett & Platt’s higher probable upside, analysts clearly believe Leggett & Platt is more favorable than Bassett Furniture Industries.

Summary

Bassett Furniture Industries beats Leggett & Platt on 9 of the 17 factors compared between the two stocks.

About Bassett Furniture Industries

Bassett Furniture Industries, Incorporated, together with its subsidiaries, manufactures, markets, and retails home furnishings in the United States and internationally. It operates in three segments: Wholesale, Retail Company-Owned Stores, and Corporate and Other. The company engages in the design, manufacture, sourcing, sale, and distribution of furniture products, including dining, bedroom and bedding, home decorations, rugs, and outdoor furniture to a network of company-owned retail stores, licensee-owned stores, and independent retailers. The company also distributes its products through multi-line furniture stores, including Bassett galleries or design centers, as well as sells online; and engages in wood and upholstery operations. In addition, it owns and leases land, retail store properties, warehouses, and distribution centers. Bassett Furniture Industries, Incorporated was founded in 1902 and is based in Bassett, Virginia.

About Leggett & Platt

Leggett & Platt, Inc. engages in the manufacture and distribution of furniture and engineered components and products among homes, offices, automobiles, and commercial aircraft. It operates through the following segments: Bedding Products, Specialized Products, and Furniture, Flooring & Textile Products. The Bedding Products segment supplies products and components for the home, including mattress springs and specialty foam, as well as adjustable beds, bedding machinery, steel rod, and drawn wire. The Specialized Products segment supplies titanium, nickel, and stainless-steel tubing for the aerospace industry, and serves the construction market with its hydraulic cylinders group. The Flooring, Furniture & Textile Products segment produces an extensive line of components and engineered systems for office, residential, and contract furniture manufacturers. The company was founded by J. P. Products and C. B. Platt in 1883 and is headquartered in Carthage, MO.