Has Lincoln Electric Outperformed Its Peers?

Lincoln Electric’s (LECO) stock price has appreciated by 21% since the start of 2016. As of March 22, the company was trading at a stock price of $59.30. LECO’s stock price declined by 4.6% on February 23, the day the company announced its 4Q15 results.

The annual actual EPS was at $3.20 in 2015, compared to an actual EPS of $1.70 in 2014. The dent in earnings was due to unfavorable foreign currency, pension settlement, and contingent consideration related to an acquisition.

LECO has undergone restructuring and has projected that the efficiencies will increase. However, the stock price declined due to a lower-than-expected outlook issued by the company for 1Q16.

LECO’s stock has performed well but hasn’t outperformed its peer group on a year-to-year basis. The stock prices of Illinois Tools Works (ITW), Snap-on (SNA), and Stanley Black & Decker (SWK) saw yearly stock price increases of 4%, 8%, and 7%, respectively.

On a yearly basis, LECO’s stock declined by 8% as compared to a 3% decline in the SPDR S&P 500 ETF (SPY). The iShares S&P 1500 Index ETF (ITOT) has exposure to LECO, and the SPDR S&P Dividend ETF (SDY) has 1.02% exposure to LECO.

LECO is not just rewarding its shareholders with dividends but also through stock repurchases. Stock repurchases enhance the earnings per share by reducing the number of outstanding shares.

For fiscal 2015, Lincoln Electric (LECO) successfully gave back $486 million to its shareholders. It returned profits to shareholders through dividends—up 19% to $87 million—and share repurchase up by 30% to $399 million.