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Lincoln Electric (LECO) Q2 Earnings & Sales Top Estimates, Up Y/Y

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Lincoln Electric Holdings, Inc. LECO reported record second-quarter 2021 adjusted earnings of $1.67 per share, which beat the Zacks Consensus Estimate of $1.46. The bottom line also improved 109% year over year. Strong demand across end markets and improved productivity contributed to the company’s bottom-line growth.

Including one-time items, the bottom line came in at $1.60 per share compared with 45 cents in the prior-year quarter.

Total revenues increased 40% year over year to $826 million. Moreover, the top line surpassed the Zacks Consensus Estimate of $786 million. The improvement in revenues was owing to 36% growth in organic sales, favorable impact of 3.3% from foreign exchange and 0.6% benefit from acquisition.

Costs and Margins

Cost of goods sold went up 38% to $552 million from the prior-year quarter. Gross profit rose 45% to $274 million. Gross margin came in at 33% compared with the year-ago quarter’s 32%.

Selling, general and administrative expenses increased 20% year over year to $152 million. Adjusted operating profit increased 98% to $125 million in the quarter. Adjusted operating margin was 15.1% in the reported quarter compared with 10.7% a year ago.

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

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

Segment Performance

Americas Welding: The segment’s sales increased to $497 million from $361 million in the year-earlier period. Adjusted operating income totaled $84 million compared with $47 million witnessed in the prior-year quarter.

International Welding: This segment’s revenues increased 43% year over year to $259 million in the reported quarter. The segment reported adjusted operating profit of $30 million compared with the year-ago quarter’s $9.7 million.

The Harris Products Group: The segment’s second-quarter sales amounted to around $119 million, reflecting year-over-year improvement of 45.1%. Adjusted operating profit was $18 million compared with the prior-year quarter’s $12 million.

Financial Update

Lincoln Electric had cash and cash equivalents of around $191 million at the end of the second quarter of 2021 compared with $257 million at the end of the 2020. The company generated cash flow from operations of around $100 million during the reported quarter compared with $104 million in the prior-year quarter.

The company’s debt to invested capital was at 45.9% at the end of the second quarter of 2021 compared with 47.6% as of the end of 2020.

Price Performance

Lincoln Electric’s shares have gained 50.8% over the past year, outperforming the industry’s growth of 21.6%.

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Zacks Rank and Stocks to Consider

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

Better-ranked stocks in the Industrial Products sector include Greif, Inc GEF, Lindsay Corporation LNN and Pentair plc PNR. All of these stocks sport a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Greif has an anticipated earnings growth rate of 47.2% for fiscal 2021. The company’s shares have gained around 29.3%, year to date.

Lindsay has an estimated earnings growth rate of 1% for the ongoing fiscal year. Year to date, the company’s shares have rallied 29.1%.

Pentair has a projected earnings growth rate of 26% for the current year. The stock has appreciated around 29%, so far this year.


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