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Lincoln Electric Holdings (LECO)
NASDAQ:LECO
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Lincoln Electric Holdings
(NASDAQ:LECO)
75Outperform
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.
Negative Factors
Demand Softening
The CEO's comments point to further demand softening which could result in lower volumes and margins.
Market Demand
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.
Lincoln Electric Holdings (LECO) vs. S&P 500 (SPY)
Market Cap
$11.08B
Dividend Yield1.46%
Average Volume (3M)311.12K
Price to Earnings (P/E)24.2
Beta (1Y)1.22
Revenue Growth-4.23%
EPS Growth-13.42%
CountryUS
Employees12,000
SectorIndustrials
Sector Strength72
IndustryIndustrial Goods
Share Statistics
EPS (TTM)8.15
Shares Outstanding56,095,333
10 Day Avg. Volume325,698
30 Day Avg. Volume311,123
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)2.77
Price to Cash Flow (P/CF)28.90
P/FCF Ratio25.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$231.67Price Target Upside17.29% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
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 demonstrates strong profitability with robust profit margins and efficient cash flow management. The company's balanced leverage and strong equity utilization indicate a solid financial position, though revenue growth has seen some decline.Income Statement
Lincoln Electric Holdings demonstrates strong profitability with a gross profit margin of 36.7% and a net profit margin of 11.6% over the TTM. Despite a slight decline in revenue growth, the company maintains solid EBIT and EBITDA margins of 16.8% and 18.5%, respectively, reflecting efficient operational management.85
Very Positive
Balance Sheet
The company's balance sheet is robust with a debt-to-equity ratio of 1.03, indicating a balanced leverage position. The return on equity stands at 35.1%, showcasing excellent utilization of shareholder equity. However, the equity ratio of 37.7% suggests moderate reliance on debt financing.78
Positive
Cash Flow
Lincoln Electric's cash flow is strong, with a free cash flow to net income ratio of 1.03, indicating solid cash generation relative to net income. The operating cash flow to net income ratio of 1.28 reflects efficient cash conversion. However, free cash flow growth has been negative, warranting attention.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 4.01B | 4.19B | 3.76B | 3.23B | 2.66B | Gross Profit |
| 1.47B | 1.48B | 1.28B | 1.07B | 871.34M | EBIT |
| 636.46M | 717.85M | 612.34M | 357.04M | 282.07M | EBITDA |
| 636.46M | 824.67M | 700.14M | 675.23M | 410.35M | Net Income Common Stockholders |
| 466.11M | 545.25M | 472.22M | 276.58M | 206.12M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 377.26M | 393.79M | 197.15M | 192.96M | 257.28M | Total Assets |
| 3.52B | 3.38B | 3.18B | 2.59B | 2.31B | Total Debt |
| 100.00M | 1.16B | 1.20B | 769.82M | 718.19M | Net Debt |
| -277.26M | 766.10M | 1.01B | 576.86M | 460.91M | Total Liabilities |
| 2.19B | 2.07B | 2.15B | 1.73B | 1.52B | Stockholders Equity |
| 1.33B | 1.31B | 1.03B | 863.91M | 790.25M |
| Cash Flow | Free Cash Flow | |||
| 482.37M | 576.55M | 311.50M | 302.53M | 292.16M | Operating Cash Flow |
| 598.98M | 667.54M | 383.39M | 365.06M | 351.36M | Investing Cash Flow |
| -361.23M | -74.73M | -504.69M | -205.36M | -49.21M | Financing Cash Flow |
| -244.64M | -412.39M | 133.72M | -221.94M | -246.14M |
Lincoln Electric Holdings Technical Analysis
Negative
197.52
Price Trends
196.83
Positive
200.26
Negative
195.22
Positive
Market Momentum
-0.37
Positive
45.59
Neutral
39.83
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LECO, the sentiment is Negative. The current price of 197.52 is below the 20-day moving average (MA) of 204.21, above the 50-day MA of 196.83, and above the 200-day MA of 195.22, indicating a neutral trend. The MACD of -0.37 indicates Positive momentum. The RSI at 45.59 is Neutral, neither overbought nor oversold. The STOCH value of 39.83 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LECO.
Lincoln Electric Holdings Risk Analysis
Lincoln Electric Holdings disclosed 17 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 (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $74.79B | 22.85 | 110.24% | 2.17% | -1.30% | 20.26% | |
77 Outperform | $24.39B | 9.55 | 24.30% | 1.16% | -2.99% | 159.26% | |
75 Outperform | $11.08B | 24.25 | 35.36% | 1.46% | -4.23% | -13.42% | |
72 Outperform | $41.37B | 31.04 | 14.97% | 0.62% | 5.22% | 4.46% | |
72 Outperform | $63.06B | 28.21 | 9.66% | 1.77% | 10.29% | 22.72% | |
69 Neutral | $29.98B | 33.65 | 26.22% | 1.89% | -11.28% | -23.69% | |
62 Neutral | $8.16B | 12.85 | 0.64% | 3.04% | 3.83% | -15.83% |
* Industrials Sector Average
Performance Comparison
LECO
Lincoln Electric Holdings
197.52
-51.43
-20.66%
AME
Ametek
178.86
-2.11
-1.17%
DOV
Dover
180.77
7.37
4.25%
EMR
Emerson Electric Company
110.72
2.09
1.92%
ITW
Illinois Tool Works
254.82
-2.13
-0.83%
ROK
Rockwell Automation
265.15
-13.52
-4.85%
Lincoln Electric Holdings Earnings Call Summary
Earnings Call Date: Feb 13, 2025 | % Change Since: 1.81% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted record profitability and strong cash flow management, alongside significant cost savings and growth in the automation portfolio. However, challenges such as international sales decline, deferred capital spending, and uncertainties around tariffs and market conditions were noted.Highlights
Record Profitability Despite Sales Decline
Achieved record profitability with a 17.6% adjusted operating income margin, despite a 6.5% decline in organic sales.
Strong Cash Flow and Shareholder Returns
Maintained strong cash flow generation with over 90% cash conversion and increased shareholder returns by 23% through a higher dividend payout rate and $264 million in share repurchases.
Successful Cost Management and Savings
Achieved better than expected cost savings, increasing annual savings estimate to $60-$50 million, with a quarterly savings run rate of $15-$20 million.
Automation Portfolio Growth
Automation portfolio achieved $911 million in sales, and remains on pace to hit the $1 billion 2025 sales target, with a 17% EBIT margin, a 200 basis point improvement from the prior year.
Lowlights
Sales Decline in International Welding
International Welding sales declined approximately 17% due to industrial weakness in Europe, Turkey, and Asia Pacific.
Ongoing Deferred Capital Spending
Continued deferred capital spending across large industrial customers, impacting equipment and automation demand.
Impact of Tariffs and Market Uncertainties
Pending tariffs and uncertain market conditions present challenges, with potential unfavorable impacts on full-year net sales.
Company Guidance
During the Lincoln Electric Holdings, Inc. 2024 Fourth Quarter Financial Results Conference Call, the company provided guidance for 2025 with an emphasis on sustaining growth and enhancing profitability. Key metrics highlighted included an achievement of $4 billion in net sales and a record 17.6% adjusted operating income margin for 2024. Despite a 6.5% decline in organic sales, they achieved their second-highest adjusted earnings per share at $9.29. The automation portfolio reached $911 million in sales, contributing to a strong cash flow generation with a 90% cash conversion rate. For 2025, Lincoln Electric projects low single-digit sales growth, supported by a 50-100 basis point pricing increase and approximately 200 basis points from 2024 acquisitions. They expect cost savings of $40 to $55 million from efficiency initiatives, aiming for continued margin expansion with a low 20% incremental margin rate. The company remains committed to a balanced capital allocation strategy, having invested over $1.3 billion in growth and returned approximately $1.6 billion to shareholders under their higher standard strategy.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.