LECO: Raising Rating to GRADUALLY ACCUMULATE; 1Q18 Beats; Upping Estimates
- 1Q18 (Mar) adjusted EPS of $1.10 (vs 88 cents a year earlier) was up 25% YoY and 6 cents above our projection on 9% organic sales growth and higher-than-anticipated margins;
- For 2018, with strong organic growth from improving end-markets, benefits from the integration of Air Liquide (“AL”), a lower tax rate, and price increases partially offsetting higher raw material costs, our EPS estimate is now $4.65 (from $4.38), up 23% from 2017;
- For 2019, our EPS estimate is now $5.28 (from $5.10), up 13% from our 2018 projection;
- With the shares trading for 17.9x our 12-month forward EPS estimate of $4.86, or 119% of their uneven 3 to 5 year projected EPS growth rate of 15%, our rating is now GRADUALLY ACCUMULATE (from Hold), with a 12-month price target of $109.
Lincoln Electric Holdings is a holding company. Through its subsidiaries, the company is a manufacturer of welding, cutting and brazing products. Welding products include arc welding power sources, plasma cutters, wire feeding systems, robotic welding packages, integrated automation systems, fume extraction equipment, consumable electrodes, fluxes and welding accessories and other welding consumables and fabrication. The company's product offering also includes computer numeric controlled plasma and oxy-fuel cutting systems and regulators and torches used in oxy-fuel welding, cutting and brazing. In addition, the company is engaged in the brazing and soldering alloys market.
Great Lakes Review is located in Cleveland, Ohio, was founded in 1981 and became a division of Wellington Shields & Co. LLC in 2011. Great Lakes Review is a research boutique focused on the fundamentally-oriented investor seeking companies that dominate their respective specialty niche regardless of industry. The objective is to make money for the long-term by gradually accumulating a diversified portfolio from a universe of no more than 30 companies. Although short-term-oriented accounts will be alerted to trading opportunities, aggressive sell recommendations are triggered only by a deterioration in long-term fundamentals, not by short-term blips or investor fancy. Coverage of those names that lose their earnings momentum or earnings predictability may be dropped and replaced with more vital candidates.
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