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Lincoln Electric (LECO) Buys Zeman Group Unit, Boosts Automation

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Lincoln Electric Holdings, Inc. (LECO - Free Report) has acquired a Zeman Group’s unit, Zeman Bauelemente Produktionsgesellschaftm.b.H. in a bid to drive automation growth in structural steel applications.

Based in Vienna, Austria, Zeman Bauelemente is a leading manufacturer of robotic assembly and arc welding systems that automate the tacking and welding of steel beams. These systems are sold for structural steel and infrastructure sectors customers across the globe under the name of Steel Beam Assembler (SBA).

Notably, the latest buyout boosts Lincoln Electric’s annual automation sales by around 10% and expands its international automation capabilities to support the company’s Higher Standard 2025 Strategy. This deal also offers greater productivity to structural steel fabricators, while providing capacity to meet the rising demand from structural steel and infrastructure projects.

Lincoln Electric has been benefiting from several acquisitions made over the past few years. It acquired Inovatech Engineering Corporation and Coldwater Machine Company, Pro Systems LLC in 2018, which in turn, enhances its automated cutting solutions and application expertise. In 2019, Lincoln Electric acquired the soldering business of Worthington Industries (WOR - Free Report) , which broadened the Harris Products Group’s portfolio of industry-leading consumables. The company’s Baker Industries buyout also enabled it to expand automation and additive strategies. Lincoln Electric also acquired a controlling interest in Askaynak — a leading Turkish producer of welding consumables and equipment. The company will continue to evaluate M&A options focused primarily on tuck-in assets, supporting its Higher Standard 2025 strategy.

The company is also focused on new product development and utilizing digital platforms to engage customers. Lincoln Electric’s product launches in the automation solutions market are likely to stoke growth. Moreover, the company is focused on its cost-reduction actions to sustain margins.

Moreover, Lincoln Electric has been witnessing improving order rates across all segments, lately, as its end markets (General Industries and Transportation and Automotive) continue to recover. Management projects first-quarter 2021 organic sales to be flat to modestly high compared with the prior-year levels. It estimates current-year organic sales growth in high-single digits, driven by the current demand scenario. Considering this, Lincoln Electric anticipates incremental margin to average within the mid-to-high 20% range for 2021.

Price Performance

Lincoln Electric’s shares have gained 71.7% in the past year, outperforming the industry’s growth of 41.2%.


 

Zacks Rank & Stocks to Consider

Lincoln Electric currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Industrial Products sector are Deere & Co. (DE - Free Report) and Avery Dennison Corporation (AVY - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Deere has a projected earnings growth rate of 82.5% for fiscal 2021. Over the past year, the company’s shares have appreciated 133.2%.

Avery Dennison has an expected earnings growth rate of 11.8% for 2021. The stock has gained 79.2% in a year’s time.

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