As you might know, Lincoln Electric Holdings, Inc. (NASDAQ:LECO) just kicked off its latest second-quarter results with some very strong numbers. It was overall a positive result, with revenues beating expectations by 6.2% to hit US$591m. Lincoln Electric Holdings also reported a statutory profit of US$0.45, which was an impressive 33% above what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the recent earnings report, the consensus from eleven analysts covering Lincoln Electric Holdings is for revenues of US$2.57b in 2020, implying a measurable 7.0% decline in sales compared to the last 12 months. Statutory earnings per share are expected to sink 15% to US$3.09 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$2.49b and earnings per share (EPS) of US$2.78 in 2020. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a nice increase in earnings per share in particular.
Despite these upgrades,the analysts have not made any major changes to their price target of US$89.11, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Lincoln Electric Holdings at US$106 per share, while the most bearish prices it at US$57.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that sales are expected to slow, with a forecast revenue decline of 7.0%, a significant reduction from annual growth of 4.9% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 7.5% next year. It's pretty clear that Lincoln Electric Holdings' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Lincoln Electric Holdings following these results. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. The consensus price target held steady at US$89.11, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Lincoln Electric Holdings going out to 2024, and you can see them free on our platform here.
Plus, you should also learn about the 1 warning sign we've spotted with Lincoln Electric Holdings .
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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