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Lincoln Electric Acquires Inovatech to Aid Cutting Solutions

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Lincoln Electric Holdings, Inc. (LECO - Free Report) has acquired Inovatech Engineering Corporation and its related assets. The buyout will boost Lincoln Electric’s automated cutting solutions and application expertise for structural steel applications. Financial terms of the deal were not disclosed.

Ontario, Canada-based Inovatech is a maker of advanced robotic plasma cutting solutions. The acquisition will primarily add to Lincoln Electric’s Harris Products Group’s performance. The Harris Products Group, which contributed around 10% to Lincoln Electric’s net sales in third-quarter 2018, is involved in global cutting, soldering and brazing businesses and retail business in the United States.

Notably, the Harris Products segment witnessed a tougher margin comparison in the second and third quarter of 2018. Also, lower commodity prices continue to dent margins. However, the Inovatech buyout will contribute to the segment’s results, despite a rise in costs and inflationary pressure. Thus, the acquisition is in sync with Lincoln Electric’s efforts to expand geographically, and achieve commercial and operational excellence.

In January 2017, Lincoln Electric acquired Air Liquide Welding, a subsidiary of Air Liquide. The buyout enhanced the company’s global specialty consumables portfolio and extended its channel reach for equipment systems, and cutting, soldering and brazing solutions in Europe. The acquisition contributed 2 cents to adjusted earnings per share in the third quarter and is expected to contribute 6 cents to earnings in fourth-quarter 2018.

Moreover, Lincoln Electric continues to witness double-digit organic sales growth in its three major end markets — automotive, heavy industries, and general fabrication and energy.  Its focus on capital allocation strategy, product launches and execution of the 2020 vision are also likely to drive growth.

Share Price Performance

Lincoln Electric's shares have outperformed the industry it belongs to, over the past year. Its shares have depreciated around 5%, while the industry declined around 19%.

 

Zacks Rank & Stocks to Consider

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

Better-ranked stocks in the same sector include Enersys (ENS - Free Report) , CECO Environmental Corp. (CECE - Free Report) and Flowserve Corp. (FLS - Free Report) . All the three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Enersys has long-term earnings growth rate of 10%. Its shares have rallied 27% in a year’s time.

CECO has long-term earnings growth rate of 15%. The company’s shares have surged 61% over the past year.

Flowserve has long-term earnings growth rate of 17.3%. The stock has gained 14% over the past year.

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