Lincoln Electric Holdings, Inc.

Lincoln is seeing its overseas business beef up profits as the weakened dollar boosted exports by 28.6%. The company has surprised on estimates 3 out of the last 4 quarters by an average of 5.21%. Lincoln has a forward P/E of 11.98.

Company Description

Lincoln Electric Holdings, Inc. (LECO - Analyst Report) manufactures arc welding products, robotic welding systems, plasma and oxyfuel cutting equipment.

The company, founded in 1895, is headquartered in Cleveland and has manufacturing facilities and alliances in 20 countries. LECO also has distributors and sales offices in more than 160 countries.

Research and development is an important part of Lincoln's tradition. The company supports a state of the art technology center that seeks to pioneer arc welding technological advancements.

Arc welding is used in many industries including metal working for transportation, construction and petrochemicals. Arc welding applications are used to manufacture heavy machinery and structural steel. Arc welding is also the dominant joining method for building oil and natural gas pipelines and refineries.

Lincoln Posts Record Second Quarter Income

Lincoln is operating on all cylinders. On July 23, the company reported second quarter earnings that beat Wall Street estimates by 18.25%. Net income rose 26.9% to $70.1 million, or $1.62 per share, from $55.2 million, or $1.27, in 2007.

Sales jumped 19.3% to $699.8 million from $586.6 million a year ago. North American sales rose 10.1% year over year. With the weakened dollar, the company also saw export sales surge 28.6% to $64.5 million from $50.1 million in 2007.

Sales outside of North America were also strong, jumping 34.2%. Excluding changes in foreign currency exchange rates and acquisitions, sales outside of North America rose 12.3% in the second quarter.

The company is optimistic despite a challenging North American industrial economic cycle and volatile metals markets.

"Our broad market position in key global growth segments allowed us to take advantage of expansion opportunities, and minimize the impact of softening in traditional markets," said John M. Stropki, Chairman and Chief Executive Officer.

"We continue to be focused in executing our global strategy, capitalizing on key infrastructure development opportunities, and leveraging our value-driven welding product and service offering," he said.

Consensus Estimates Rise for the Full Year

Covering analysts are bullish on Lincoln in fiscal 2008. Estimates for the third quarter are up a penny in the last 30 days to $1.37 from $1.36. For the full year, consensus estimates rose 7 cents to $5.58 from $5.51 per share. 60 days ago, estimates were at $5.16.

Value Fundamentals

Lincoln Electric has a forward P/E of 11.98. Its price-to-book is 2.46. The company has an excellent five year return on equity (ROE) of 18.12%.