Start here if you're new
what it is
Lincoln Electric sells the machines, parts, and automation systems factories use to weld, cut, and build metal products.
how it gets paid
Last year Lincoln Electric made about $4.23B in revenue (a record).
why it's growing
Revenue grew 5.6% last year. In contrast, fourth quarter 2025 faces softer automation volumes from deferred capital spending, seasonal slowing in hvac-related demand, and higher interest expense following recent acquisitions.
what just happened
Lincoln Electric reported adjusted EPS of $2.65 for Q4, ahead of consensus near $2.53 (about a 5% beat).
At a glance
A balance sheet — strong enough to weather a downturn
85/100 earnings predictability — you can trust these numbers
25.1x trailing p/e — priced about right
1.3% dividend yield — cash in your pocket every quarter
about 20% return on invested capital — solid for industrial equipment
xvary composite: 81/100 — above average
What they do
Lincoln Electric sells the machines, parts, and automation systems factories use to weld, cut, and build metal products.
Lincoln Electric wins because welding is not a casual purchase. If your plant runs on its machines and consumables, switching risks downtime, bad welds, and angry customers. The company has 59 manufacturing facilities across 18 countries and still posts adjusted operating margins in the high-teens, which means it turns industrial grunt work into premium pricing.
How they make money
$4.23B
annual revenue · their business grew +5.6% last year
total revenue
$4.23B
+5.6%
The products that matter
core welding systems
Welding Equipment
part of the $4.23B revenue base
this is the center of the business. even without a clean segment split here, the company still generated record revenue near $4.23B with strong double-digit net margins around this product family.
core demand
factory automation tools
Automation Systems
pressure point in the recent quarter
management specifically flagged softer automation volumes while discussing the december-period setup. that matters because the street still expects $10.50 in fy2026 EPS.
watch closely
cutting and fabrication
Cutting Systems
supports the broader industrial franchise
this sits inside the same record revenue base and helps keep Lincoln embedded across metalworking workflows. one product sale matters. a broader installed process matters more.
ecosystem fit
Key numbers
25.1x
trailing p/e
P/E → price divided by past earnings → so what: you are paying $25.10 for each $1 of trailing profit.
17.6%
adj. operating margin (FY)
Operating margin → profit after running the business → so what: on a full-year adjusted basis Lincoln keeps about $0.18 of each sales dollar before interest and taxes — strong, but not the 20%+ headline some snapshots round up to.
~20%
return on invested capital
Return on invested capital → profit generated from money tied up in the business → so what: recent prints run near 20%, which is a disciplined operator, not a factory empire collecting dust.
$1.2B
long-term debt
Long-term debt equals 8% of capital. So what: the balance sheet has room for buybacks, deals, or a downturn without immediate stress.
Financial health
A
strength
- balance sheet grade A — very strong financial position
- risk rank 2 — safer than 80% of stocks
- price stability 80 / 100
- long-term debt $1.2B (8% of capital)
- net profit margin 13.8% — keeps 14 cents of every dollar in revenue
- return on equity 22% — $0.22 profit for every $1 investors have put in
A with balance sheet grade and risk rank standing out. your money faces less risk here than at most public companies.
Total return vs. market
You invested $10,000 in LECO 3 years ago → it's now worth $17,730.
The index would have given you $13,920.
source: institutional data · total return
What just happened
beat estimates
Lincoln Electric reported adjusted EPS of $2.65, beating consensus near $2.53 by about 5%.
The company put up solid results, but the bigger debate is price versus growth. Annual revenue rose 5.6% to about $4.23B, while projected long-term sales growth slows toward mid-single digits.
$4.23B
FY revenue
$2.65
eps
~34.7%
Q4 gross margin
the number that mattered
Q4 gross margin compressed versus the prior year (about 35% versus the prior ~36% area), which is why the record top line did not automatically translate into multiple expansion.
-
the company is facing tough comparisons in the december period, as last year’s quarter benefited from higher automation project deliveries, lower incentive compensation expense, and a more favorable cost backdrop.in contrast, fourth quarter 2025 faces softer automation volumes from deferred capital spending, seasonal slowing in hvac-related demand, and higher interest expense following recent acquisitions. while pricing remains firm and sales are expected to rise, incremental margins are pressured by mix, normalization of prior-year cost benefits, and a higher expense base.
-
as a result, earnings may well decline despite top-line growth.
-
operationally, we expect 2026 to be a solid year.earnings are expected to rebound in 2026 as several temporary headwinds ease and growth drivers reaccelerate. automation demand should recover as deferred capital spending in automotive and heavy industry converts to revenue, supported by improving order trends and new model launch activity. pricing actions taken in 2025 remain embedded, while permanent cost savings and operational discipline support margin expansion as volumes recover.
-
lower cash tax payments through early 2026 enhance cash flow flexibility, enabling continued share repurchases.lincoln’s resilient manufacturing footprint, and disciplined capital allocation strategy, should help the company to convert improving demand into strong earnings growth. the outlook for lincoln over the next 3 to 5 years is favorable, but the stock price already reflects the sales and earnings growth we envision. top- and bottom-line gains should be supported by a recovery in automation demand, steady consumables growth, disciplined pricing, and sustained margin expansion.
-
however, the equity is trading within our target price range out to 2028–2030.the broader market appears to have priced in a normalization in automation and continued high profitability, making upside from multiple expansion unlikely.
source: company earnings report, 2026
Get this snapshot in your inbox
This page, delivered free — plus weekly updates when the numbers change. plain english, no spam.
weekly updates
earnings alerts
plain english
no spam
What could go wrong
the #1 risk is an automation and industrial capex slowdown.
med
automation orders stay soft
deferred capital spending already showed up in automation volumes. if customers keep waiting, the rebound case gets pushed out.
this matters because the company is essentially a multi-billion-dollar exposure to industrial demand, not a diversified defensive holding.
med
higher interest expense eats into EPS
recent acquisitions brought higher interest expense into the story. if financing costs stay up while volumes soften, earnings can lag revenue.
the company already flagged this in its december-period setup, so this is current pressure, not a hypothetical one.
med
margin pressure from weaker mix
seasonal HVAC slowing and softer automation demand can shift the revenue mix the wrong way. that is how a low-teens net margin stops looking comfortable.
you do not need a collapse to feel pain here. a few points of demand softness can do enough.
the cleanest way to frame it: this is a good business with record revenue near $4.23B, but almost all of that base still leans on healthy industrial spending.
source: institutional data · regulatory filings · risk analysis
Pay attention to
earnings
next quarterly print
the next report needs to show whether $2.21 EPS was a base for 2026 or the last clean quarter before the slowdown shows up.
trend
automation demand recovery
management already called out softer automation volumes. if that line improves, the rebound case gets a lot more believable.
risk
interest expense after acquisitions
a better demand backdrop helps, but higher financing cost can still drag on EPS. this is the quiet margin leak to monitor.
metric
sales path after a record year
some models look for a modest step-down from the record ~$4.23B year as growth normalizes. watch whether demand stabilizes near the peak or keeps stepping down.
Analyst rankings
short-term outlook
top 20%
momentum score 2 — analysts expect above-average price performance in the year ahead. in human-speak, they still like the setup.
risk profile
above average
stability score 2 — safer than roughly 80% of stocks. not a bunker stock, but sturdier than most cyclicals.
chart momentum
average
technical score 3 — the chart is fine, not euphoric. price action is helping, not proving, the thesis.
earnings predictability
85 / 100
this business tends to deliver relatively reliable numbers. in human-speak, you usually do not get blindsided.
source: institutional data
Institutional activity
institutions have been net buying for 2 consecutive quarters — 315 buyers vs. 253 sellers in 3q2025. total institutional holdings: 42.1M shares. net buying for 2 quarters.
source: institutional data
Price targets
3-5 year target range
$191
$338
$244
current price
$265
target midpoint · +8% from current · 3-5yr high: $275 (+10% · 4% ann'l return)
Want the deeper analysis?
The full deep dive: dcf model, scenario analysis, competitive moat breakdown, and quarterly tracking — everything on this page, taken further.
see plans from $5/moThe deep dive