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How Does Lincoln Electric Holdings, Inc.'s (NASDAQ:LECO) Earnings Growth Stack Up Against Industry Performance?

Simply Wall St

After looking at Lincoln Electric Holdings, Inc.'s (NasdaqGS:LECO) latest earnings announcement (31 December 2019), I found it useful to revisit the company's performance in the past couple of years and assess this against the most recent figures. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Lincoln Electric Holdings's performance has been impacted by industry movements. In this article I briefly touch on my key findings.

View our latest analysis for Lincoln Electric Holdings

How LECO fared against its long-term earnings performance and its industry

LECO's trailing twelve-month earnings (from 31 December 2019) of US$293m has increased by 2.1% compared to the previous year.

However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 11%, indicating the rate at which LECO is growing has slowed down. What could be happening here? Well, let’s take a look at what’s going on with margins and if the entire industry is facing the same headwind.

NasdaqGS:LECO Income Statement, March 19th 2020

In terms of returns from investment, Lincoln Electric Holdings has invested its equity funds well leading to a 36% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 13% exceeds the US Machinery industry of 6.4%, indicating Lincoln Electric Holdings has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Lincoln Electric Holdings’s debt level, has increased over the past 3 years from 21% to 21%.

What does this mean?

Lincoln Electric Holdings's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research Lincoln Electric Holdings to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for LECO’s future growth? Take a look at our free research report of analyst consensus for LECO’s outlook.
  2. Financial Health: Are LECO’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2019. This may not be consistent with full year annual report figures.

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.