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Lincoln Electric (LECO) Down 1.3% Since Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Lincoln Electric Holdings, Inc. (LECO - Free Report) . Shares have lost about 1.3% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is LECO due for a breakout? 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 drivers.
Lincoln Electric Q4 Earnings, Revenues Top Estimates
Lincoln Electric Holdings delivered adjusted earnings of $1.01 per share in fourth-quarter 2017, up 25% year over year. Earnings came ahead of the Zacks Consensus Estimate of 96 cents. Results were driven by the company’s focused operational and commercial initiatives.
Including one-time items, earnings in the reported quarter came in at 36 cents compared with 81 cents recorded in the prior-year quarter.
Total revenues climbed 33% year over year to $747 million including a 20.3% benefit from acquisitions, 6.8% higher volumes, 3.2% increase in price and 2.2% from favorable foreign exchange. Sales also beat the Zacks Consensus Estimate of $698 million.
Costs and Margins
Cost of goods sold escalated 39% year over year to $508 million. Gross profit advanced 21% year over year to $239 million. Gross margin contracted 300 basis points (bps) year over year to 32%.
Selling, general and administrative expenses flared up 33% to $153 million from $114 million recorded in the year-earlier quarter. Adjusted operating profit rose 12% year over year to $92.8 million in the reported quarter. However, operating margin descended 230 bps year over year to 12.4%.
Financial Update
Lincoln Electric had cash and cash equivalents of $327 million at the end of 2017 compared with $379 million recorded at the end of 2016. Cash flow from operations came in at $89.5 million in 2017 compared with $72.4 million generated in the prior year.
2017 Performance
Lincoln Electric’s adjusted earnings came in at $3.79 in 2017 that beat the Zacks Consensus Estimate of $3.75. Earnings increased 15% year over year. Including special items, the company reported earnings per share of $3.71 per share in 2017 compared with $2.91 in the prior year. Total revenues increased 15% year over year to $2.62 billion in 2017 and also surpassed the Zacks Consensus Estimate of $2.57 billion.
Through 2017, the company remained focused on operational and commercial initiatives and an aggressive integration plan. This is expected to deliver long-term growth.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter compared to one lower.
VGM Scores
At this time, LECO has a nice Growth Score of B, though it is lagging a bit on the momentum front with a C. 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than momentum investors.
Outlook
Estimates have been broadly trending upward for the stock and the magnitude of these revisions looks promising. It comes with little surprise LECO has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Lincoln Electric (LECO) Down 1.3% Since Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Lincoln Electric Holdings, Inc. (LECO - Free Report) . Shares have lost about 1.3% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is LECO due for a breakout? 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 drivers.
Lincoln Electric Q4 Earnings, Revenues Top Estimates
Lincoln Electric Holdings delivered adjusted earnings of $1.01 per share in fourth-quarter 2017, up 25% year over year. Earnings came ahead of the Zacks Consensus Estimate of 96 cents. Results were driven by the company’s focused operational and commercial initiatives.
Including one-time items, earnings in the reported quarter came in at 36 cents compared with 81 cents recorded in the prior-year quarter.
Total revenues climbed 33% year over year to $747 million including a 20.3% benefit from acquisitions, 6.8% higher volumes, 3.2% increase in price and 2.2% from favorable foreign exchange. Sales also beat the Zacks Consensus Estimate of $698 million.
Costs and Margins
Cost of goods sold escalated 39% year over year to $508 million. Gross profit advanced 21% year over year to $239 million. Gross margin contracted 300 basis points (bps) year over year to 32%.
Selling, general and administrative expenses flared up 33% to $153 million from $114 million recorded in the year-earlier quarter. Adjusted operating profit rose 12% year over year to $92.8 million in the reported quarter. However, operating margin descended 230 bps year over year to 12.4%.
Financial Update
Lincoln Electric had cash and cash equivalents of $327 million at the end of 2017 compared with $379 million recorded at the end of 2016. Cash flow from operations came in at $89.5 million in 2017 compared with $72.4 million generated in the prior year.
2017 Performance
Lincoln Electric’s adjusted earnings came in at $3.79 in 2017 that beat the Zacks Consensus Estimate of $3.75. Earnings increased 15% year over year. Including special items, the company reported earnings per share of $3.71 per share in 2017 compared with $2.91 in the prior year. Total revenues increased 15% year over year to $2.62 billion in 2017 and also surpassed the Zacks Consensus Estimate of $2.57 billion.
Through 2017, the company remained focused on operational and commercial initiatives and an aggressive integration plan. This is expected to deliver long-term growth.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter compared to one lower.
VGM Scores
At this time, LECO has a nice Growth Score of B, though it is lagging a bit on the momentum front with a C. 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than momentum investors.
Outlook
Estimates have been broadly trending upward for the stock and the magnitude of these revisions looks promising. It comes with little surprise LECO has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.