LECO - Lincoln Electric Dragged Down By Softening End-Markets (Rating Upgrade)
2024-06-30 07:52:00 ET
Summary
- Lincoln Electric is facing near-term challenges due to economic uncertainty and market contraction, with virtually all of its major markets seeing some level of weakness.
- Despite an unexpected contraction in sales, Lincoln Electric management expects margins to remain relatively stable and free cash flow should be healthy.
- Lincoln Electric's business mix has been shifting towards more equipment sales, leading to higher margins and positioning the company well for a future where automation is even more important.
- LECO shares aren't really that cheap now, but they seldom get really cheap barring a disaster, and this may be about as good of an entry point as investors can expect without a full recession.
Cyclical downturns can be a good time to look for quality names looking at depressed near-term results, and that would seem to apply to Lincoln Electric (LECO). This leading player in welding and factory automation has seen basically all of its major markets slip into contraction and with higher rates, economic uncertainty, and nervousness around the election all in play, a recovery may not be in the works until sometime in 2025....
Lincoln Electric Dragged Down By Softening End-Markets (Rating Upgrade)