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Why Is Lincoln Electric (LECO) Up 2.8% Since the Last Earnings Report?
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A month has gone by since the last earnings report for Lincoln Electric Holdings, Inc. (LECO - Free Report) . Shares have added about 2.8% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Lincoln Electric Q4 Earnings in Line, Revenues Beat
Lincoln Electric Holdings reported earnings of $0.81 per share in fourth-quarter 2016, up 8% year over year. Earnings came in line with the Zacks Consensus Estimate.
Including one-time items, earnings in the year-ago quarter were $0.81 compared with $0.68 in the prior year quarter. The reported quarter did not include any such adjustments.
Total revenue edged down 0.7% year over year to $564 million. Sales, however, beat the Zacks Consensus Estimate of $547 million.
Costs and Margins
Cost of goods sold dipped 1.5% year over year to $366.4 million. Gross profit inched up 0.7% year over year at $197.5 million. However, gross margin expanded 50 basis points (bps) year over year to 35%.
Selling, general and administrative expenses increased 3% to $114.7 million from $110.8 million in the prior-year quarter. Operating profit dipped 3% year over year to $83 million in the quarter. Operating margin contracted 30 bps year over year to 14.7%.
Financial Update
Lincoln Electric reported cash and cash equivalents of $379 million at the end of 2016, up from $304 million as of Dec 31, 2015. In 2016, the company delivered $66.6 million of operating cash flow compared with $75.4 million in 2015.
Lincoln Electric paid its shareholders $74.6 million through dividends and repurchase of 0.8 million shares during the quarter. The company declared a 9.4% hike in the quarterly cash dividend, from 32 cents per share to 35 cents, or $1.40 per share on an annual basis, which was paid on Jan13, 2017.
On Oct 20, 2016, Lincoln Electric issued Senior Unsecured Notes in aggregate principal amount of $350 million through a private placement. The notes have maturities ranging from 12 to 25 years, with a weighted average effective interest rate of 3.1% and a weighted average term of 18 years. The proceeds will be utilized for general corporate purposes.
Effective Jun 30, 2016, the company deconsolidated the financial results of its Venezuela subsidiary and began reporting its results using the cost method of accounting. As a result, Venezuelan financial results are no longer included in the consolidated financial statements.
2016 Performance
Lincoln Electric posted adjusted earnings of $3.29 per share for 2016, down 5.5% year over year. Earnings missed the Zacks Consensus Estimate of $3.30. On a reported basis, including special items, Lincoln Electric’s earnings were $2.91 per share in the quarter, compared with $1.70 in the year-ago quarter.
Revenues for full-year 2016 declined 10.3% year over year to $2.3 billion. Revenues came in line with the Zacks Consensus Estimate.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Lincoln Electric Holdings, Inc. Price and Consensus
At this time, Lincoln Electric's stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with an 'F'. Charting a somewhat similar path, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for growth based on our styles scores.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Why Is Lincoln Electric (LECO) Up 2.8% Since the Last Earnings Report?
A month has gone by since the last earnings report for Lincoln Electric Holdings, Inc. (LECO - Free Report) . Shares have added about 2.8% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Lincoln Electric Q4 Earnings in Line, Revenues Beat
Lincoln Electric Holdings reported earnings of $0.81 per share in fourth-quarter 2016, up 8% year over year. Earnings came in line with the Zacks Consensus Estimate.
Including one-time items, earnings in the year-ago quarter were $0.81 compared with $0.68 in the prior year quarter. The reported quarter did not include any such adjustments.
Total revenue edged down 0.7% year over year to $564 million. Sales, however, beat the Zacks Consensus Estimate of $547 million.
Costs and Margins
Cost of goods sold dipped 1.5% year over year to $366.4 million. Gross profit inched up 0.7% year over year at $197.5 million. However, gross margin expanded 50 basis points (bps) year over year to 35%.
Selling, general and administrative expenses increased 3% to $114.7 million from $110.8 million in the prior-year quarter. Operating profit dipped 3% year over year to $83 million in the quarter. Operating margin contracted 30 bps year over year to 14.7%.
Financial Update
Lincoln Electric reported cash and cash equivalents of $379 million at the end of 2016, up from $304 million as of Dec 31, 2015. In 2016, the company delivered $66.6 million of operating cash flow compared with $75.4 million in 2015.
Lincoln Electric paid its shareholders $74.6 million through dividends and repurchase of 0.8 million shares during the quarter. The company declared a 9.4% hike in the quarterly cash dividend, from 32 cents per share to 35 cents, or $1.40 per share on an annual basis, which was paid on Jan13, 2017.
On Oct 20, 2016, Lincoln Electric issued Senior Unsecured Notes in aggregate principal amount of $350 million through a private placement. The notes have maturities ranging from 12 to 25 years, with a weighted average effective interest rate of 3.1% and a weighted average term of 18 years. The proceeds will be utilized for general corporate purposes.
Effective Jun 30, 2016, the company deconsolidated the financial results of its Venezuela subsidiary and began reporting its results using the cost method of accounting. As a result, Venezuelan financial results are no longer included in the consolidated financial statements.
2016 Performance
Lincoln Electric posted adjusted earnings of $3.29 per share for 2016, down 5.5% year over year. Earnings missed the Zacks Consensus Estimate of $3.30. On a reported basis, including special items, Lincoln Electric’s earnings were $2.91 per share in the quarter, compared with $1.70 in the year-ago quarter.
Revenues for full-year 2016 declined 10.3% year over year to $2.3 billion. Revenues came in line with the Zacks Consensus Estimate.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Lincoln Electric Holdings, Inc. Price and Consensus
Lincoln Electric Holdings, Inc. Price and Consensus | Lincoln Electric Holdings, Inc. Quote
VGM Scores
At this time, Lincoln Electric's stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with an 'F'. Charting a somewhat similar path, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for growth based on our styles scores.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.