Linde’s 1Q Profit Outlook Tops Estimates After 4Q Beat; Shares Gain

Linde reported better-than-expected 4Q results and forecasted 1Q earnings that came in above Street estimates. Shares of the multinational chemicals company gained 3.3% on Friday.

Linde’s (LIN) 4Q earnings of $2.30 per share beat analysts’ expectations of $2.14 and increased 22% year-over-year, as the company benefited from strong margin expansion. The company’s adjusted operating margin expanded by 320 basis points to 22.2% during the reported quarter.

Fourth-quarter sales grew 3% to $7.3 billion and surpassed analysts’ estimates of about $7.1 billion. The company’s underlying sales growth of 3% year-over-year was led by higher prices and volumes.

As for the first quarter of 2021, the company anticipates earnings in the range of $2.20-$2.25 per share, higher than analysts’ expectations of $2.12 per share. For 2021, the company projects earnings to be in the range of $9.10-$9.30 per share, reflecting year-over-year growth of 11%-13%. Analysts expect 2021 earnings to come in at $9.18 per share.

Linde’s CEO Steve Angel said, “Looking ahead, the near-term economic outlook remains uncertain.” However, Angel noted that the company expects “to capture more than our fair share of quality growth opportunities in secular markets like healthcare, electronics and clean energy.” (See Linde stock analysis)

On Dec. 7, Barclays analyst Duffy Fischer upgraded Linde to Buy from Hold and raised the price target to $285 (10.7% upside potential) from $275. In a note to investors, the analyst said that the company’s EBITDA has improved in all the quarters of 2020, and it “can do even better.”

Overall, the Street has a cautiously optimistic outlook on the stock, with a Moderate Buy consensus rating based on 11 Buys and 4 Holds. The average analyst price target of $287.50 implies upside potential of about 11.7% to current levels. Shares gained about 22.6% in one year.

Furthermore, TipRanks data shows that financial blogger opinions are 87% Bullish, compared to a sector average of 70%.

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