A month has gone by since the last earnings report for Lincoln Electric Holdings (
LECO Quick Quote LECO - Free Report) . Shares have lost about 0.6% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Lincoln Electric due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Lincoln Electric Q4 Earnings & Sales Beat, Rise Y/Y
Lincoln Electric reported fourth-quarter 2022 record adjusted earnings of $1.94 per share, beating the Zacks Consensus Estimate of $1.90. The bottom line increased 21% year over year.
Including one-time items, the bottom line was a record $1.87 per share compared with $1.25 in the prior-year quarter.
Total revenues increased 10.3% year over year to a record $931 million. The improvement in revenues can be attributed to 14.3% growth in organic sales and a 0.7% benefit from acquisitions. These were partly offset by unfavorable foreign currency exchange of 4.7%. The top line surpassed the Zacks Consensus Estimate of $927 million. Costs and Margins
The cost of goods sold rose 9% to $623 million from the prior-year quarter. The gross profit increased 13.1% to $308 million. The gross margin came in at 33.1% compared with the year-ago quarter’s 32.3%.
Selling, general and administrative expenses increased 8.9% year over year to $164 million. The adjusted operating profit increased 20.2% to $147 million in the quarter. The adjusted operating margin was 15.8% in the reported quarter compared with 14.5% in the year-ago quarter.
Americas Welding: The segment’s sales increased to $574 million from $480 million in the year-earlier quarter. Adjusted operating income totaled $114 million compared with $84 million witnessed in the prior-year quarter.
International Welding: This segment’s revenues decreased 1% year over year to $243 million in the reported quarter. The segment reported an adjusted operating profit of $23 million compared with the year-ago quarter’s $28 million.
The Harris Products Group: The segment’s fourth-quarter sales amounted to around $114 million, reflecting a year-over-year decline of 3.5%. Adjusted operating profit was $12 million compared with the prior-year quarter’s $16 million.
Lincoln Electric had cash and cash equivalents of around $197 million at the end of 2022 compared with $193 million at 2021-end. The company generated $383 million cash flow from operations in 2022 compared with $365 million in 2021.
The company’s debt to invested capital was 53.8% in 2022 compared with 47.1% in 2021.
Lincoln Electric reported adjusted earnings per share (EPS) of a record $8.27 in 2022 compared with $6.22 in the prior year. Earnings beat the Zacks Consensus Estimate of $8.22. Including one-time items, the bottom line was a record $8.04, up 75% from the $4.60 reported in 2021.
Sales were up 16.3% year over year to a record $3.76 billion. The top line was in line with the Zacks Consensus Estimate. How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -5% due to these changes.
At this time, Lincoln Electric has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Lincoln Electric has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.