Lincoln’s Foothold in Welding Market Benefits Its Shareholders



Lincoln Electric: An overview

For over 120 years, Lincoln Electric (LECO) has designed and manufactured welding and cutting products. It has a global position in the brazing and soldering alloy market.

LECO operates in 47 manufacturing locations and provides a diverse range of products. The company’s products include arc welding power sources, wire feeding systems, robotic welding packages, and fume extraction equipment used in oxy-fuel welding and cutting.

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LECO broadly operates in five segments: North America, South America, Europe Welding, Asia Pacific Welding, and Harris Group Products. Each segment has strong brands with leading positions within their respective markets. These segments contributed about 64%, 6%, 13%, 7%, and 10%, respectively, to the company’s consolidated revenues for 2015.

Under its brand name Welding Experts, LECO’s solutions are used in diverse industry sectors. The company’s major end-user markets include shipbuilding, automotive, power generation and process industry, pipe mills and pipelines, offshore oil and gas, and general and heavy metal fabrication. It serves customers in 160 countries and employs approximately 10,000 people worldwide.

Lincoln Electric’s stock performance

In this weak and challenging environment, many companies’ growth and profitability have been subdued. LECO’s revenues and operating profits also declined at a CAGR of 3.9% and 7.4%, respectively, since 2012. However, the stock has been rising since the start of 2016.

LECO rose by ~21% in comparison to the SPDR S&P 500 ETF (SPY), which has increased by 2% during the same period. On a yearly basis, LECO and SPY declined by 8% and 3%, respectively.

Other players in the welding products industry are Illinois Tools Works (ITW), Snap-on (SNA), and Stanley Black & Decker (SWK). These companies saw stock price increases of 4%, 8%, and 7%, respectively, on a yearly basis.


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