Lincoln Electric Holdings Inc. (LECO): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
We are reiterating our Neutral recommendation on Lincoln Electric with a target price of $77. In the fourth quarter of 2013, the company reported a 38% year-on-year improvement in adjusted earnings to $1.09 per share. Lincoln Electric will benefit from investment in business, which includes an active acquisition program and development in manufacturing platforms. In addition, the company continues to focus on innovative solutions and margin improvements that will also drive growth. However, LECO is cautious about any substantial improvement in the global mining sector, going forward. Moreover, the slow pace of economic stabilization in Europe and volatility in raw material prices remain headwinds in the near term.

Overview:

Headquartered in Cleveland, Ohio, Lincoln Electric has more than 45 manufacturing locations, including operations and joint ventures in 19 countries and a worldwide network of distributors and sales offices covering more than 160 countries.

Lincoln is a full-line manufacturer and reseller of welding and cutting products. The company's welding products range from welding power sources, wire feeding systems, robotic welding packages, fume extraction equipment, consumables and fluxes to regulators and torches used in cutting. The level of product technology varies from basic units used in light manufacturing to sophisticated robotic applications used in high-production welding and fabrication.

Lincoln Electric produces three types of arc welding electrodes including stick electrodes, solid electrodes used for continuous feeding in mechanized welding, and cored electrodes that are also used for mechanized welding. Arc welding is carried on in many industries. The metal working field involves production of arc welding in transportation, construction, fabrication, petrochemical and other industries. Also, in the manufacturing of metal products, arc welding applications range from producing consumer appliances to fabricating heavy machinery and structural steel. Arc welding is the dominant joining method for building and other industrial construction, including oil and gas pipeline fabrication, and oil refinery construction. The company sells its products in both the domestic and international markets.

Lincoln has five operating segments, namely North America Welding, Europe Welding, Asia Pacific Welding, South America Welding and The Harris Products Group. The North America Welding segment comprises operations in the United States, Canada and Mexico. The other three welding segments contain welding operations in Europe, Asia Pacific and South America, respectively. The fifth segment, The Harris Products Group, includes the company's global cutting, soldering and brazing businesses as well as the retail business in the United States.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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