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Lincoln Electric (LECO) Earnings Top, Revenues Lag in Q4

Zacks Equity Research

Lincoln Electric Holdings, Inc. LECO delivered adjusted earnings of $1.29 per share in fourth-quarter 2018, surging 28% year over year. The reported figure also surpassed the Zacks Consensus Estimate of $1.20.

 

Including one-time items, earnings in the reported quarter came in at $1.35 compared with 36 cents recorded in the prior-year quarter.

 

Total revenues dipped 0.4% year over year to $744 million. Organic sales growth was 1.6% in the reported quarter. Sales missed the Zacks Consensus Estimate of $793 million.

 

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

 

 

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

Lincoln Electric Holdings, Inc. price-consensus-eps-surprise-chart | Lincoln Electric Holdings, Inc. Quote

Costs and Margins

Cost of goods sold decreased 3% year over year to $494 million. Gross profit advanced 5% year over year to $250 million. Gross margin contracted 180 basis points (bps) year over year to 33.47%.

 

Selling, general and administrative expenses inched up 0.7% to $154 million from the year-earlier quarter. Adjusted operating profit rose 7% year over year to $97 million in the reported quarter. Operating margin expanded 90 bps year over year to 13%.

 

Financial Update

 

Lincoln Electric had cash and cash equivalents of $359 million at the end of 2018 with $327 million recorded at the end of 2017. The company recorded cash flow from operations of $329 million in 2018 compared with $3354 million recorded in prior year.

 

2018 Results

 

Lincoln Electric reported adjusted earnings per share of $4.82 in 2018, up 27% from $3.79 in the prior year. Earnings beat the Zacks Consensus Estimate of $4.74. Including one-time items, earnings in the stood at $4.37 compared with $3.71 in the prior year.

 

Sales increased 15% year over year to $3.03 billion. The top line missed the Zacks Consensus Estimate of $3.05 billion.

 

Share Price Performance

 

 

Shares of the company have fallen around 7% in a year, compared with the industry’s decline of 15%.

 

Zacks Rank & Key Picks

 

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

 

Some better-ranked stocks in the Industrial Products sector are Axon Enterprise, Inc AAXN, Alarm.com Holdings, Inc. ALRM and EnerSys ENS. While Axon and Alarm.com currently flaunt a Zacks Rank #1 (Strong Buy), EnerSys carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

 

Axon has an expected earnings growth rate of 14.5% for 2019. The company’s shares have rallied 105.9% in the past year.

 

Alarm.com has an expected earnings growth rate of 7.8% for 2019.  The stock has climbed 84% in a year’s time.

 

EnerSys has an expected earnings growth rate of 9.5% for 2019. Its shares have gained 25.5% in the past year.

 

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