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Lincoln Electric Holdings, Inc. (LECO) Hits Fresh High: Is There Still Room to Run?
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Have you been paying attention to shares of Lincoln Electric Holdings (LECO - Free Report) ? Shares have been on the move with the stock up 1.3% over the past month. The stock hit a new 52-week high of $225 in the previous session. Lincoln Electric Holdings has gained 2.4% since the start of the year compared to the 14.7% move for the Zacks Industrial Products sector and the 37.5% return for the Zacks Manufacturing - Tools & Related Products industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 27, 2023, Lincoln Electric reported EPS of $2.4 versus consensus estimate of $2.27.
For the current fiscal year, Lincoln Electric is expected to post earnings of $9.42 per share on $4.16 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $9.97 per share on $4.25 billion in revenues. This represents a year-over-year change of 2.87% and 2.14%, respectively.
Valuation Metrics
Lincoln Electric may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Lincoln Electric has a Value Score of C. The stock's Growth and Momentum Scores are A and F, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 23.6X current fiscal year EPS estimates, which is a premium to the peer industry average of 18.3X. On a trailing cash flow basis, the stock currently trades at 22.8X versus its peer group's average of 12.1X. Additionally, the stock has a PEG ratio of 1.58. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Lincoln Electric currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Lincoln Electric passes the test. Thus, it seems as though Lincoln Electric shares could have potential in the weeks and months to come.
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Lincoln Electric Holdings, Inc. (LECO) Hits Fresh High: Is There Still Room to Run?
Have you been paying attention to shares of Lincoln Electric Holdings (LECO - Free Report) ? Shares have been on the move with the stock up 1.3% over the past month. The stock hit a new 52-week high of $225 in the previous session. Lincoln Electric Holdings has gained 2.4% since the start of the year compared to the 14.7% move for the Zacks Industrial Products sector and the 37.5% return for the Zacks Manufacturing - Tools & Related Products industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 27, 2023, Lincoln Electric reported EPS of $2.4 versus consensus estimate of $2.27.
For the current fiscal year, Lincoln Electric is expected to post earnings of $9.42 per share on $4.16 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $9.97 per share on $4.25 billion in revenues. This represents a year-over-year change of 2.87% and 2.14%, respectively.
Valuation Metrics
Lincoln Electric may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Lincoln Electric has a Value Score of C. The stock's Growth and Momentum Scores are A and F, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 23.6X current fiscal year EPS estimates, which is a premium to the peer industry average of 18.3X. On a trailing cash flow basis, the stock currently trades at 22.8X versus its peer group's average of 12.1X. Additionally, the stock has a PEG ratio of 1.58. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Lincoln Electric currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Lincoln Electric passes the test. Thus, it seems as though Lincoln Electric shares could have potential in the weeks and months to come.