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Lincoln Electric (LECO) Q4 Earnings, Revenues Top Estimates

Lincoln Electric Holdings, Inc. LECO delivered adjusted earnings of $1.01 per share in fourth-quarter 2017, up 25% year over year. Earnings came ahead of the Zacks Consensus Estimate of 96 cents. Results were driven by the company’s focused operational and commercial initiatives.
Including one-time items, earnings in the reported quarter came in at 36 cents compared with 81 cents recorded in the prior-year quarter.
Total revenues climbed 33% year over year to $747 million including a 20.3% benefit from acquisitions, 6.8% higher volumes, 3.2% increase in price and 2.2% from favorable foreign exchange. Sales also beat the Zacks Consensus Estimate of $698 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 escalated 39% year over year to $508 million. Gross profit advanced 21% year over year to $239 million. Gross margin contracted 300 basis points (bps) year over year to 32%.

Selling, general and administrative expenses flared up 33% to $153 million from $114 million recorded in the year-earlier quarter. Adjusted operating profit rose 12% year over year to $92.8 million in the reported quarter. However, operating margin descended 230 bps year over year to 12.4%.
Financial Update
Lincoln Electric had cash and cash equivalents of $327 million at the end of 2017 compared with $379 million recorded at the end of 2016. Cash flow from operations came in at $89.5 million in 2017 compared with $72.4 million generated in the prior year.
2017 Performance
Lincoln Electric’s adjusted earnings came in at $3.79 in 2017 that beat the Zacks Consensus Estimate of $3.75. Earnings increased 15% year over year. Including special items, the company reported earnings per share of $3.71 per share in 2017 compared with $2.91 in the prior year. Total revenues increased 15% year over year to $2.62 billion in 2017 and also surpassed the Zacks Consensus Estimate of $2.57 billion.
Through 2017, the company remained focused on operational and commercial initiatives and an aggressive integration plan. This is expected to deliver long-term growth.
Share Price Performance
Over the past six months, Lincoln Electric has underperformed the industry with respect to price performance. The stock has gained around 3.1%, while the industry recorded growth of 12.5%.
Zacks Rank & Other Key Picks
Lincoln Electric currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same sector include H&E Equipment Services, Inc. HEES, Astec Industries, Inc. ASTE and Komatsu Ltd. KMTUY. While H&E Equipment Services sports a Zacks Rank #1 (Strong Buy), Astec and Komatsu carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
H&E Equipment Services has a long-term earnings growth rate of 18.6%. Its shares have soared 70% over the past six months.
Astec has a long-term earnings growth rate of 10%. The company’s shares have rallied 26% in last six months.
Komatsu has a long-term earnings growth rate of 27%. The stock has gained 43% in six months’ time.
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