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Lincoln Electric Holdings (LECO)
NASDAQ:LECO
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Lincoln Electric Holdings
(NASDAQ:LECO)
76Outperform
Positive Factors
Cost Management
The company is taking action, with both temporary and structural cost cuts which should limit decremental margins and overall EPS compression.
Restructuring Strategy
LECO is applying a playbook seen in prior downturns, with volume dependent temporary savings but also acceleration of structural restructuring, setting up the company well for a more normalized environment.
Negative Factors
End Market Softness
Given persistent softness across end markets (particularly Auto, Heavy Industries, and Europe), management remains cautious through 1Q25.
Market Performance
LECO is experiencing a broad based downturn with volume compression across all key served verticals; the pressure from Auto and Off Highway is set to extend through 1H25.
Product Category Decline
Management noted a slower 3Q across all categories, with both Consumables down LSD-MSD%, Equipment down HSD% and Automation down LDD%.
Lincoln Electric Holdings (LECO) vs. S&P 500 (SPY)
Market Cap
$11.33B
Dividend Yield1.44%
Average Volume (3M)374.08K
Price to Earnings (P/E)25.1
Beta (1Y)1.20
Revenue Growth-2.29%
EPS Growth-14.49%
CountryUS
Employees12,000
SectorIndustrials
Sector Strength91
IndustryManufacturing - Tools & Accessories
Share Statistics
EPS (TTM)2.16
Shares Outstanding55,826,283
10 Day Avg. Volume374,912
30 Day Avg. Volume374,077
Financial Highlights & Ratios
PEG Ratio-31.09
Price to Book (P/B)7.81
Price to Sales (P/S)0.00
P/FCF Ratio19.43
Enterprise Value/Market Cap0.99
Enterprise Value/Revenue0.70
Enterprise Value/Gross Profit7.65
Enterprise Value/Ebitda3.66
Forecast
1Y Price Target
$207.67Price Target Upside2.30% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
Lincoln Electric Holdings Business Overview & Revenue Model
Company DescriptionLincoln Electric Holdings, Inc. is a global manufacturer and market leader in welding products, arc welding equipment, robotic welding systems, plasma and oxy-fuel cutting equipment. Founded in 1895 and headquartered in Cleveland, Ohio, the company serves a diverse range of industries including automotive, aerospace, construction, and energy. Lincoln Electric is renowned for its commitment to innovation, high-quality products, and solutions that improve productivity for its customers.
How the Company Makes MoneyLincoln Electric makes money through the design, development, and sale of a comprehensive line of welding, cutting, and joining products. The company's revenue model is primarily based on the sale of consumables and equipment. Consumables, which include electrodes, fluxes, and wires, are a significant and recurring revenue stream due to their continuous need in welding operations. Equipment sales include advanced welding machines and systems, which are often complemented by the sale of related accessories and software solutions. Additionally, Lincoln Electric generates revenue through its automation solutions, which integrate robotic and automated systems into customer operations, enhancing efficiency and production capabilities. The company also partners with various distributors and suppliers globally, expanding its reach and accessibility to different markets, thus contributing to its overall earnings.
Lincoln Electric Holdings Financial Statement Overview
Summary
Lincoln Electric Holdings presents a well-balanced financial profile with strong profitability and cash flow generation. Despite a recent dip in revenue, the company maintains a robust balance sheet with low leverage and consistent equity levels. Continued focus on revenue growth and efficiency can enhance overall performance.Income Statement
Lincoln Electric Holdings demonstrates robust profitability with a consistent gross profit margin and solid EBIT margin. However, the recent decline in total revenue from $4.0 billion in 2024 to $3.4 billion in TTM (Trailing-Twelve-Months) suggests a need for revenue growth strategies. The net profit margin remains healthy, indicating effective cost management.80
Positive
Balance Sheet
The company's balance sheet is strong with a low debt-to-equity ratio, improving from 0.84 in 2024 to 0.08 in TTM, reflecting reduced leverage. The equity ratio is stable, indicating a solid financial foundation. However, attention to maintaining equity levels is essential amid fluctuating liabilities.75
Positive
Cash Flow
Lincoln Electric Holdings exhibits impressive cash flow management with substantial free cash flow growth, increasing from $482 million in 2024 to $534 million in TTM. The operating cash flow to net income ratio is favorable, highlighting efficient cash conversion, though maintaining this trajectory is crucial.85
Very Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 4.03B | 4.01B | 4.19B | 3.76B | 3.23B | 2.66B | Gross Profit |
| 1.47B | 1.47B | 1.48B | 1.28B | 1.07B | 871.34M | EBIT |
| 669.51M | 636.46M | 717.85M | 612.34M | 357.04M | 282.07M | EBITDA |
| 739.43M | 736.70M | 824.67M | 700.14M | 675.23M | 410.35M | Net Income Common Stockholders |
| 461.18M | 466.11M | 545.25M | 472.22M | 276.58M | 206.12M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 374.98M | 377.26M | 393.79M | 197.15M | 192.96M | 257.28M | Total Assets |
| 3.38B | 3.52B | 3.38B | 3.18B | 2.59B | 2.31B | Total Debt |
| 1.16B | 1.26B | 1.16B | 1.20B | 769.82M | 718.19M | Net Debt |
| 786.36M | 883.81M | 766.10M | 1.01B | 576.86M | 460.91M | Total Liabilities |
| 2.07B | 2.19B | 2.07B | 2.15B | 1.73B | 1.52B | Stockholders Equity |
| 1.31B | 1.33B | 1.31B | 1.03B | 863.91M | 790.25M |
| Cash Flow | Free Cash Flow | ||||
| 534.08M | 482.37M | 576.55M | 311.50M | 302.53M | 292.16M | Operating Cash Flow |
| 651.38M | 598.98M | 667.54M | 383.39M | 365.06M | 351.36M | Investing Cash Flow |
| -357.59M | -361.23M | -74.73M | -504.69M | -205.36M | -49.21M | Financing Cash Flow |
| -263.73M | -244.64M | -412.39M | 133.72M | -221.94M | -246.14M |
Lincoln Electric Holdings Technical Analysis
Positive
203.01
Price Trends
186.45
Positive
190.96
Positive
192.96
Positive
Market Momentum
3.66
Negative
67.86
Neutral
93.77
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LECO, the sentiment is Positive. The current price of 203.01 is above the 20-day moving average (MA) of 185.64, above the 50-day MA of 186.45, and above the 200-day MA of 192.96, indicating a bullish trend. The MACD of 3.66 indicates Negative momentum. The RSI at 67.86 is Neutral, neither overbought nor oversold. The STOCH value of 93.77 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for LECO.
Lincoln Electric Holdings Risk Analysis
Lincoln Electric Holdings disclosed 18 risk factors in its most recent earnings report. Lincoln Electric Holdings reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Lincoln Electric Holdings Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $11.33B | 25.05 | 34.83% | 1.44% | -2.29% | -14.49% | |
73 Outperform | $11.58B | 47.93 | 8.51% | ― | 4.62% | 21.58% | |
71 Outperform | $17.35B | 17.36 | 19.15% | 2.41% | -0.88% | 0.04% | |
69 Neutral | $5.15B | 15.90 | 11.85% | 1.85% | -3.69% | -11.76% | |
69 Neutral | $1.67B | 15.79 | 8.69% | 3.66% | -2.93% | 2.74% | |
68 Neutral | $11.06B | 30.35 | 4.03% | 4.58% | -3.04% | ― | |
64 Neutral | $4.43B | 12.01 | 5.16% | 249.23% | 4.03% | -11.73% |
* Industrials Sector Average
Performance Comparison
LECO
Lincoln Electric Holdings
203.01
-21.26
-9.48%
KMT
Kennametal
21.85
-3.38
-13.40%
RBC
RBC Bearings
368.17
71.15
23.95%
SNA
Snap-on
331.73
57.69
21.05%
SWK
Stanley Black & Decker
71.46
-14.90
-17.25%
TKR
Timken Company
73.68
-16.53
-18.32%
Lincoln Electric Holdings Earnings Call Summary
Earnings Call Date:Apr 30, 2025
(Q1-2025)
| % Change Since: 10.33%|
Next Earnings Date:Jul 24, 2025
Earnings Call Sentiment Neutral
The earnings call conveys a cautious outlook with some strong performance indicators like increased sales, cash flow, and ROIC. However, these are tempered by significant challenges like volume declines, margin pressures, and uncertainty in automation and global trade policy impact, suggesting a balanced outlook.Q1-2025 Updates
Positive Updates
Sales Increase and Pricing Actions
First quarter sales increased approximately 2.4% to $1.04 billion, driven by a 4.9% benefit from acquisitions and 2.6% from higher prices. Additional pricing actions are expected to yield mid-single-digit percent higher prices in the second quarter.
Strong Cash Flow and Shareholder Returns
Generated record cash flows with a 130% cash conversion ratio. Returned $150 million to shareholders through higher dividend payouts and share repurchases.
Resilience in Consumable Sales
Better resilience in consumable organic sales as customer order rates improved through the quarter.
ROIC and Cash Conversion
Maintained a strong adjusted return on invested capital (ROIC) of 21.5% and a 130% cash conversion ratio.
Harris Products Group Performance
First quarter sales increased 9% with a 9.5% higher price and 60 basis points of higher volumes. EBIT increased approximately 22% with a margin improvement of 190 basis points to 17.9%.
Negative Updates
Volume Decline
Volumes were 3.8% lower due to softer industrial cycles and labor negotiations in Turkey, which had a 200 basis point unfavorable impact on net sales.
Adjusted Operating Income Margin Decline
Adjusted operating income margin declined by 60 basis points to 16.9%, affected by a 110 basis point impact from acquisitions and the situation in Turkey.
Automation Segment Risk
Automation orders rates and backlog have not yet normalized, putting a normally strong second half of the year at risk.
Challenges in Heavy Industries
Heavy industries remain challenged with high teens decline, particularly in agricultural sectors.
Impact of Tariffs and Cost Pressures
Potential for higher tariffs leading to lower volumes and a need for further pricing actions.
Company Guidance
During Lincoln Electric's 2025 first-quarter conference call, the company reported a 2.4% increase in sales to $1.04 billion, driven by a 4.9% benefit from acquisitions and a 2.6% increase in prices, despite facing a 3.8% decline in volumes. The adjusted operating income margin declined by 60 basis points to 16.9%, with Turkey and acquisitions negatively impacting margins by 110 basis points. Adjusted earnings per share were $2.16, slightly below expectations due to a $0.05 headwind from Turkey and unfavorable foreign exchange. The company achieved a record cash flow with a 130% cash conversion ratio and returned $150 million to shareholders. While organic sales declined by 1.2%, excluding a 190 basis point impact from Turkey, Lincoln Electric continues to anticipate mid-single-digit pricing increases in the second quarter to offset announced tariffs and expects to generate $15 to $20 million in savings. Despite the cautious macroeconomic outlook, the company remains focused on strategic initiatives, maintaining strong ROIC at 21.5%, and leveraging its supply chain to mitigate costs.Lincoln Electric Holdings Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Lincoln Electric Announces Board Changes and New Appointment
Neutral
Feb 24, 2025
On February 19, 2025, Lincoln Electric Holdings announced that Kellye I. Walker would resign from its Board of Directors, effective at the 2025 annual meeting of shareholders. Her departure is not due to any disagreements with the company. Concurrently, the board expanded from eleven to twelve members, electing N. Joy Falotico, former President of The Lincoln Motor Company, as a new independent director. Falotico’s appointment is expected to enhance the board with her global leadership experience and financial expertise, supporting Lincoln Electric’s strategic initiatives for long-term growth. Additionally, Michele R. Kuhrt, Executive Vice President and Chief Transformation Officer, announced her retirement effective August 31, 2025, and will assist with the transition until then.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.