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What Do Analysts Recommend for Lincoln Electric before 2Q16 Earnings?

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Analyst recommendations

Lincoln Electric (LECO) has a Wall Street analyst consensus rating of “hold.” Of 15 analysts surveyed by Bloomberg, five gave the company a “buy” rating, ten gave a “hold” rating, and there were no “sell” ratings.

Analysts gave a price target of $65, 14.1% above June 28’s closing price of $56.98.

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LECO’s recent ratings

RBC Capital Markets (RBC) gave a “sector performer” rating to LECO, with a price target of $59 on June 24. The price target implies 3.5% increase over June 28’s close of $56.98.

Stifel (SF) gave a “buy” rating on LECO’s stock, with a price target of $67 on June 14. The price target implies a 17.6% potential appreciation over June 28’s price of $56.98.

Wunderlich Securities gave LECO a “buy” rating, with the highest price target of $85 on April 19. This implies a 49.2% potential price appreciation over June 28’s close. 

What do these analyst recommendations mean?

None of the Wall Street analysts gave a “sell” rating on LECO. We believe this is a positive sign, as LECO appropriately positioned its balance sheet and capital structure to achieve its goal for 2020.

Please read Lincoln’s New Organizational Structure and Operational Efficiency for more information. LECO’s management that it can implement timely acquisitions and return cash to its shareholders.

Adjusted EPS

In 1Q16, Lincoln Electric’s (LECO) adjusted earnings per share (or EPS) were above analysts’ expectations. The earnings were favorably impacted by new commercial programs, cost reduction initiatives, and operational efficiency.

Lincoln Electric increased its 2016 dividend and share repurchase target. This indicates that the company expects to show strong cash flows and balance sheet in 2016.

How well the company is placed to achieve its 2016 targets and battle with weak industrial demand—especially in its North America segment—depends on its 2Q16 earnings release on July 25, 2016. The analyst community’s ratings are leaning more toward “hold” than “buy.”

Investors who want to trade in industrials can consider the Industrial Select Sector SPDR ETF (XLI). Major holdings in XLI include General Electric (GE) with exposure of 11.0%, 3M (MMM) with exposure of 5.5%, and Honeywell International (HON) with exposure of 4.8%.

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