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Lincoln Electric (LECO) Q1 Earnings & Revenues Top Estimates

Lincoln Electric Holdings, Inc. LECO reported earnings of 88 cents per share in first-quarter 2017, up 16% year over year. Earnings also surpassed the Zacks Consensus Estimate of 79 cents.

Including one-time items, earnings in the reported quarter came in at 84 cents compared with 76 cents recorded in the prior-year quarter. However, the prior-year quarter did not include any adjustments.

Total revenue went up 5.5% year over year to $580.9 million, driven by 2.9% higher volumes, a 2.1% increase in product prices and a 0.6% benefit from acquisitions. Sales also beat the Zacks Consensus Estimate of $569 million.

Lincoln Electric Holdings, Inc. Price, Consensus and EPS Surprise


Lincoln Electric Holdings, Inc. Price, Consensus and EPS Surprise | Lincoln Electric Holdings, Inc. Quote

Costs and Margins

Cost of goods sold increased 4.3% year over year to $377 million. Gross profit went up 7.8% year over year to $197.5 million. Moreover, gross margin expanded 80 basis points (bps) year over year to 35%.

Selling, general and administrative expenses flared up 7.5% to $122.4 million from $113.8 million recorded in the prior-year quarter. Adjusted operating profit rose 13% year over year to $85.1 million in the reported quarter. Operating margin also expanded 90 bps year over year to 14.6%.

Financial Update

Lincoln Electric had cash and cash equivalents of $401.4 million at the end of first-quarter 2017 compared with $379 million at the end of 2016. Cash flow from operations came in at $76.2 million in the reported quarter compared with $24.7 million recorded in the year-ago quarter.

On Mar 2, Lincoln Electric entered into exclusive negotiations with Air Liquide to acquire its France-based subsidiary, Air Liquide Welding. The proposed acquisition is subject to a definitive agreement between the parties, and customary conditions and other provisions. Air Liquide Welding is an important player in the manufacturing of welding and cutting technologies, and had a turnover of around €350 million ($427 million) in 2016.

Lincoln Electric is poised to gain from focus on its customers, and execution of the 2020 vision and strategy. These investments will enhance Lincoln Electric’s portfolio of solutions.

Share Price Performance

In the last one year, Lincoln Electric outperformed the Zacks classified Machinery Tools & Related Products sub-industry with respect to price performance. The stock gained around 40%, while the industry recorded growth of 24.5% over the same time frame.

Zacks Rank & Key Picks

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

Some better-ranked stocks in the same sector are ACCO Brands Corporation ACCO, Casella Waste Systems, Inc. CWST and Deere & Company DE. All the three stocks boast a Zacks Rank #1 (Strong Buy). You can see  the complete list of today’s Zacks #1 Rank stocks here.

ACCO Brands has an average positive earnings surprise of 24.74% for the trailing four quarters. Casella Waste generated an outstanding average positive earnings surprise of 165.21% in the past four quarters, while Deere has an average positive earnings surprise of 60.50% for the last four quarters.

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