We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Reasons to Hold Lincoln Electric Stock in Your Portfolio Now
Read MoreHide Full Article
Lincoln Electric Holdings Inc. (LECO - Free Report) is poised to gain from its focus on new product development, utilizing digital platforms to engage customers and successful acquisitions. However, the coronavirus pandemic’s impact is likely to dent Lincoln Electric’s revenues in the near term. Nevertheless, the company continues to implement cost reduction actions, which will help sustain margins.
The company currently carries a Zacks Rank #3 (Hold). It has a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3, offer the best investment opportunities for investors.
Price Performance
Lincoln Electric’s shares have gained 21.3% in the past year, compared with the industry’s growth of 0.3%.
Earnings, Revenues Surpass Consensus in Q2
Lincoln Electric reported second-quarter 2020 adjusted earnings of 80 cents per share, which beat the Zacks Consensus Estimate of 34 cents. Total revenues also surpassed the Zacks Consensus Estimate of $556 million.
Positive Earnings Surprise History
Lincoln Electric has a trailing four-quarter earnings surprise of 31.07%, on average.
Superior Return on Assets
Lincoln Electric currently has a Return on Assets (ROA) of 10.7%, higher than the industry’s 5.0%. An above-average ROA denotes that the company is generating earnings by effectively managing its assets.
Growth Drivers in Place
The company is focused on new product development and using digital platforms to engage customers. Focus on its new additive services business will position Lincoln Electric as a manufacturer of large scale 3D-printed metal spell parts, prototypes and tooling for industrial customers — a major growth opportunity for the company. It also continues to invest in long-term strategy for automation in support of its 2020 strategy initiatives.
Lincoln Electric is benefiting from several acquisitions. It has acquired Inovatech Engineering Corporation and Coldwater Machine Company, Pro Systems LLC, which in turn bolstered its automated cutting solutions and application expertise. In January 2019, Lincoln Electric acquired the soldering business of Worthington Industries. This broadened the Harris Products Group’s portfolio of industry-leading consumables with the addition of premium solders and fluxes. In April 2019, Lincoln Electric acquired Baker Industries to expand automation and additive strategies. Recently, the company acquired a controlling interest in Askaynak — a leading Turkish producer of welding consumables and equipment. The buyout advances the company's regional growth strategy in Europe, the Middle East and Africa.
The company is focusing on cost management to sustain margins in the backdrop of weak demand. Cost reduction actions now anticipated to provide benefits of $55 to $65 million in 2020. Exiting 2020, the company expects to realize $8 to $9 million in permanent costs savings per quarter.
Few Headwinds to Counter
The COVID-19 pandemic has impacted Lincoln Electric’s markets and operations, which include weakening demand, supply chain disruptions, and other logistics constraints. Automotive, transportation, energy, construction and heavy industries have all been impacted. Although many of the company’s customers have begun to re-open or increase operating levels, such customers might be compelled to close or limit operations due to resurgence of COVID-19 cases.
Bottom Line
Investors might want to hold on to the stock, at present, as it has ample prospects for outperforming peers in the near future.
Stocks to Consider
Some better-ranked stocks in the Industrial Products sector include Silgan Holdings, Inc. (SLGN - Free Report) , IIVI Incorporated and SiteOne Landscape Supply, Inc. (SITE - Free Report) . While Silgan and IIVI sport a Zacks Rank #1, SiteOne carries a Zacks Rank of 2, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
Silgan has a projected earnings growth rate of 28.7% for 2020. The company’s shares have gained 28% in the past year.
IIVI has an estimated earnings growth rate of 29% for the ongoing year. The company’s shares have rallied 15% in the past year.
SiteOne Landscape has an expected earnings growth rate of 15.4% for the current year. The stock has appreciated 62% over a year’s time.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Reasons to Hold Lincoln Electric Stock in Your Portfolio Now
Lincoln Electric Holdings Inc. (LECO - Free Report) is poised to gain from its focus on new product development, utilizing digital platforms to engage customers and successful acquisitions. However, the coronavirus pandemic’s impact is likely to dent Lincoln Electric’s revenues in the near term. Nevertheless, the company continues to implement cost reduction actions, which will help sustain margins.
The company currently carries a Zacks Rank #3 (Hold). It has a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3, offer the best investment opportunities for investors.
Price Performance
Lincoln Electric’s shares have gained 21.3% in the past year, compared with the industry’s growth of 0.3%.
Earnings, Revenues Surpass Consensus in Q2
Lincoln Electric reported second-quarter 2020 adjusted earnings of 80 cents per share, which beat the Zacks Consensus Estimate of 34 cents. Total revenues also surpassed the Zacks Consensus Estimate of $556 million.
Positive Earnings Surprise History
Lincoln Electric has a trailing four-quarter earnings surprise of 31.07%, on average.
Superior Return on Assets
Lincoln Electric currently has a Return on Assets (ROA) of 10.7%, higher than the industry’s 5.0%. An above-average ROA denotes that the company is generating earnings by effectively managing its assets.
Growth Drivers in Place
The company is focused on new product development and using digital platforms to engage customers. Focus on its new additive services business will position Lincoln Electric as a manufacturer of large scale 3D-printed metal spell parts, prototypes and tooling for industrial customers — a major growth opportunity for the company. It also continues to invest in long-term strategy for automation in support of its 2020 strategy initiatives.
Lincoln Electric is benefiting from several acquisitions. It has acquired Inovatech Engineering Corporation and Coldwater Machine Company, Pro Systems LLC, which in turn bolstered its automated cutting solutions and application expertise. In January 2019, Lincoln Electric acquired the soldering business of Worthington Industries. This broadened the Harris Products Group’s portfolio of industry-leading consumables with the addition of premium solders and fluxes. In April 2019, Lincoln Electric acquired Baker Industries to expand automation and additive strategies. Recently, the company acquired a controlling interest in Askaynak — a leading Turkish producer of welding consumables and equipment. The buyout advances the company's regional growth strategy in Europe, the Middle East and Africa.
The company is focusing on cost management to sustain margins in the backdrop of weak demand. Cost reduction actions now anticipated to provide benefits of $55 to $65 million in 2020. Exiting 2020, the company expects to realize $8 to $9 million in permanent costs savings per quarter.
Few Headwinds to Counter
The COVID-19 pandemic has impacted Lincoln Electric’s markets and operations, which include weakening demand, supply chain disruptions, and other logistics constraints. Automotive, transportation, energy, construction and heavy industries have all been impacted. Although many of the company’s customers have begun to re-open or increase operating levels, such customers might be compelled to close or limit operations due to resurgence of COVID-19 cases.
Bottom Line
Investors might want to hold on to the stock, at present, as it has ample prospects for outperforming peers in the near future.
Stocks to Consider
Some better-ranked stocks in the Industrial Products sector include Silgan Holdings, Inc. (SLGN - Free Report) , IIVI Incorporated and SiteOne Landscape Supply, Inc. (SITE - Free Report) . While Silgan and IIVI sport a Zacks Rank #1, SiteOne carries a Zacks Rank of 2, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
Silgan has a projected earnings growth rate of 28.7% for 2020. The company’s shares have gained 28% in the past year.
IIVI has an estimated earnings growth rate of 29% for the ongoing year. The company’s shares have rallied 15% in the past year.
SiteOne Landscape has an expected earnings growth rate of 15.4% for the current year. The stock has appreciated 62% over a year’s time.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>