U.S. Markets closed

When Should You Buy Lincoln Electric Holdings, Inc. (NASDAQ:LECO)?

Simply Wall St

Lincoln Electric Holdings, Inc. (NASDAQ:LECO), which is in the machinery business, and is based in United States, saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQGS. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s take a look at Lincoln Electric Holdings’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Lincoln Electric Holdings

Is Lincoln Electric Holdings still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 5.44% above my intrinsic value, which means if you buy Lincoln Electric Holdings today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth $87.64, then there isn’t really any room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that Lincoln Electric Holdings’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Lincoln Electric Holdings generate?

NasdaqGS:LECO Past and Future Earnings, November 25th 2019

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of Lincoln Electric Holdings, it is expected to deliver a relatively unexciting earnings growth of 9.6%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What this means for you:

Are you a shareholder? LECO’s future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on LECO, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Lincoln Electric Holdings. You can find everything you need to know about Lincoln Electric Holdings in the latest infographic research report. If you are no longer interested in Lincoln Electric Holdings, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.