Lincoln Electric Holdings, Inc. (NASDAQ:LECO)

great company

12/12

low peg

earnings and revenue beat.

They do things the right way.

Well, that's interesting. I put a limit on this a billion years ago. I knew approximately a million years ago it'd never drop back to $44 (from 74, apparently)...unless it splits! CAPS took my payday away on the Citi reverse split, maybe they'll take this one away, too. Good thing it's an admirable, well run mid-western company. Don't know if it'll outperform, but I give them a big thumbs up!

Best year in company history. Mgmt seems to believe the next two years will be better than this one. Outstanding orders. Aging infrastructure will use their products to repair. Third world companies moving into the second world.

Steady profits through hard times. Well established in their niche.

Fuqua discussion

Motley Fool Analyst Development Program- 10KChallenge writeup

Analyst: Bryan Hinmon

Lincoln Electric Holdings, Inc.
Nasdaq: LECO

Market Data
Current Price:   $60.29   
Market Cap:   $2,570 MM
MRY Sales:   $1,729 MM
Sector:      Industrials
Industry:   Industrial Machinery

Business Description
Lincoln Electric has been a Midwestern institution since 1895. The Company is more than just a designer and manufacturer of welding and cutting products – they are “The Welding Experts.” In fact, aside from the fact that the moniker was earned over a century, the slogan is actually trademarked. The core of Lincoln’s business is arc welding. Welding, in general, is the process of fusing two pieces of metal together. Arc welding is a type of welding that gets its name from the path of the electrodes that heat the metals and make them unite. The Company generates about 40 percent of revenue from welding and cutting machinery that ranges from huge industrial grade stuff to personal, do-it-yourselfer, style products. Lincoln is also a pioneer in robotic welding technology. The remaining 60 percent of its business comes from selling consumables that are used up during the welding process. This provides recurring revenue for the Company.

Arc welding is used in numerous applications. Infrastructure (buildings, bridges and rail) and energy (pipelines and offshore E&P) are the predominant applications, though welding is important in the auto and shipbuilding industries too.

Lincoln is the world’s largest manufacturer of consumables and equipment thanks to its long history, pristine reputation and global presence. It has 36 manufacturing facilities in 20 countries and sales offices worldwide. Additionally, Lincoln spends a good deal (relative to competitors) on R&D. A key result of this is the Company’s “Guaranteed Cost Reduction Program.” Under this program, the Company guarantees that the user will achieve cost savings in its manufacturing process when it utilizes Lincoln’s products. With such a guarantee winning new customers is easy.

Competitive Landscape
Threat of Substitutes
The use of steel for infrastructure has no substitutes, and given that forging the steel used to make a skyscraper in one single piece is impossible, welding doesn’t have many substitutes. So long as engineers continue to be concerned with trivial things like structural integrity and safety, welding is pretty well set in place.

Threat of New Entry
Welding is a mature industry undergoing a bit of a revival. Returns are not so attractive that they would entice new entrants. However, the existing competition is excited about the “land grab” that appears set as global infrastructure looks set to grow.

Competitive Rivalry
There are four major players and several smaller, regional players in the welding business. Lincoln is the largest, with 14 percent market share. The Company has grown its market share over the past century and has acquired smaller, weaker folk. Others in the business include Illinois Tool Works, EASB Welding & Cutting and Liquide Welding. The industry continues to be in a state of consolidation.

Power of Buyers
Lincoln has thousands of customers and would not be materially impacted if it lost one, or even a few.

Power of Suppliers
Lincoln uses raw materials that are widely available as inputs to its products. It relies on various chemicals, electronics, steel, engines, brass, copper and aluminum alloys. Most of these are available on the open market.

Long-Term Prospects
Aging and deteriorating infrastructure, combined with the search for new and more efficient energy sources will drive demand for Lincoln’s welding and cutting tools. Operating a mature industry, Lincoln will rely on rock-solid customer relationships to maintain its consumable sales. The industry is likely to continue to consolidate, which given the health of the Company’s balance sheet and still low (but dominant market share), will work to Lincoln’s advantage. I think the long-term prospects are fair but expect Lincoln to fare the best of all its competitors.

Solid management and an industry with plenty of growth opportunity.

I heard about LECO on NPR last week. What was impressive is the "lifetime job if you perform" policy. It never will layoff a worker anyrime unless they are ineffective and have always paid an average $17000 bonus every year. They were est. in 1895 so I think LECO knows how to navigate recessionwaters. Plus with a great bal. sheet and cash this is a long-term buy hands down. LECO doubled twice since 2000, that is it started at 20 went to 40, then to 80. So I figure on to 160 in the next 3-5 years. Not bad for a boring company, Oh, did I mention they are big in China?

Red Raider is Lord

Infrastructure

I work for LECO. The company is strong in other parts of the world. First time in our history we my support our workers in USA. I am happy to pay my debts back, we are trained well.. We will be the world leader of machinery in the 21st century.

Revenue is about at the 2006 level. With the commercial market not expected to recovery soon, revenue will be flat to down.

Showed up on a screen for solid 5 year growth with low debt, cash on hand and still at attractive P/E ratios.

Leader in its field, strong financials, crucial to construction = ride the recovery = Hold

infrastructure pick, attractive PE, low debt, dec. div