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Lincoln Electric (LECO) Q2 Earnings & Revenues Top Estimates
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Lincoln Electric Holdings, Inc. (LECO - Free Report) reported second-quarter 2020 adjusted earnings of 80 cents per share, which beat the Zacks Consensus Estimate of 34 cents. However, the reported figure declined 38% year over year. This can be attributed to low demand as industrial activities have slowed due to customer shutdowns on account of the coronavirus pandemic.
Including one-time items, the bottom line came in at 45 cents compared with $1.36 in the prior-year quarter.
Total revenues slumped 24% year over year to $591 million. However, the top line surpassed the Zacks Consensus Estimate of $556 million. The decline in revenues was due to a decrease of 24.8% in organic sales and an unfavorable impact of 1.1% from foreign exchange, which offset a gain of 2% from acquisitions.
Lincoln Electric Holdings, Inc. Price, Consensus and EPS Surprise
Cost of goods sold went down 21% to $401 million from the prior-year quarter. Gross profit plunged 30% to $189 million from $270 million reported in the prior-year quarter. Gross margin came in at 32.1% compared with 34.7% in the year-ago quarter.
Selling, general and administrative expenses declined 23% year over year to $126 million from the prior-year quarter. Adjusted operating profit plummeted 41% year over year to $63 million in the quarter. Adjusted operating margin came in at 10.7% compared with 13.6% in the year-ago quarter.
Financial Update
Lincoln Electric had cash and cash equivalents of around $143 million at the end of second-quarter 2020 compared with $200 million at the end of the 2019. The company reported cash flow from operations of $104 million during the second quarter compared with $126 million in the prior-year quarter.
The company’s debt to invested capital was at 53.7% at the end of second-quarter 2020 compared with 47.7% as of the end of fiscal 2019.
Outlook
Considering the uncertainty arising out of the coronavirus pandemic, the company has expanded cost reduction initiatives to sustain margins. These actions are anticipated to contribute approximately $55 million to $65 million to annualized cost savings in 2020.
Price Performance
Lincoln Electric’s shares have gained 12.3% over the past three months compared with the industry’s growth of 6.6%.
Zacks Rank and Other Stocks to Consider
Lincoln Electric currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the Industrial Products sector are Silgan Holdings Inc. (SLGN - Free Report) , IIVI Incorporated and Energous Corporation (WATT - Free Report) . While Silgan and IIVI sport a Zacks Rank #1 (Strong Buy), Energous carries a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Silgan has a projected earnings growth rate of 28.7% for the current year. The company’s shares have appreciated 10% in the past three months.
IIVI has an estimated earnings growth rate of 29% for the ongoing year. The company’s shares have rallied 46% in three months’ time.
Energous has an expected earnings growth rate of 44% for 2020. The stock has soared 252.6% over the past three months.
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Lincoln Electric (LECO) Q2 Earnings & Revenues Top Estimates
Lincoln Electric Holdings, Inc. (LECO - Free Report) reported second-quarter 2020 adjusted earnings of 80 cents per share, which beat the Zacks Consensus Estimate of 34 cents. However, the reported figure declined 38% year over year. This can be attributed to low demand as industrial activities have slowed due to customer shutdowns on account of the coronavirus pandemic.
Including one-time items, the bottom line came in at 45 cents compared with $1.36 in the prior-year quarter.
Total revenues slumped 24% year over year to $591 million. However, the top line surpassed the Zacks Consensus Estimate of $556 million. The decline in revenues was due to a decrease of 24.8% in organic sales and an unfavorable impact of 1.1% from foreign exchange, which offset a gain of 2% from acquisitions.
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 went down 21% to $401 million from the prior-year quarter. Gross profit plunged 30% to $189 million from $270 million reported in the prior-year quarter. Gross margin came in at 32.1% compared with 34.7% in the year-ago quarter.
Selling, general and administrative expenses declined 23% year over year to $126 million from the prior-year quarter. Adjusted operating profit plummeted 41% year over year to $63 million in the quarter. Adjusted operating margin came in at 10.7% compared with 13.6% in the year-ago quarter.
Financial Update
Lincoln Electric had cash and cash equivalents of around $143 million at the end of second-quarter 2020 compared with $200 million at the end of the 2019. The company reported cash flow from operations of $104 million during the second quarter compared with $126 million in the prior-year quarter.
The company’s debt to invested capital was at 53.7% at the end of second-quarter 2020 compared with 47.7% as of the end of fiscal 2019.
Outlook
Considering the uncertainty arising out of the coronavirus pandemic, the company has expanded cost reduction initiatives to sustain margins. These actions are anticipated to contribute approximately $55 million to $65 million to annualized cost savings in 2020.
Price Performance
Lincoln Electric’s shares have gained 12.3% over the past three months compared with the industry’s growth of 6.6%.
Zacks Rank and Other Stocks to Consider
Lincoln Electric currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the Industrial Products sector are Silgan Holdings Inc. (SLGN - Free Report) , IIVI Incorporated and Energous Corporation (WATT - Free Report) . While Silgan and IIVI sport a Zacks Rank #1 (Strong Buy), Energous carries a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Silgan has a projected earnings growth rate of 28.7% for the current year. The company’s shares have appreciated 10% in the past three months.
IIVI has an estimated earnings growth rate of 29% for the ongoing year. The company’s shares have rallied 46% in three months’ time.
Energous has an expected earnings growth rate of 44% for 2020. The stock has soared 252.6% over the past three months.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained an impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>