Why Lincoln Electric’s Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Lincoln Electric (Nasdaq: LECO  ) jumped as much as 18% today after announcing third quarter earnings.

So what: Revenue fell 0.6%, to $697.6 million in the quarter, due to a weak macroeconomic environment. The result was below the $719.7 million in revenue that analysts expected.

But the really impressive numbers were on the bottom line, where adjusted earnings per share jumped from $0.66 a year ago, to $0.80 this quarter, ahead of estimates by $0.06.

Now what: The improved margins give confidence that, if economic conditions improve, the company will be able to leverage revenue growth to the bottom line. Shares are currently trading at 15 times trailing earnings, which is a decent price given the company's consistent results. I'd be a buyer on a pullback, which shares have already begun to do as trading continues throughout the day.

Interested in more info on Lincoln Electric? Add it to your watchlist by clicking here.

 

Fool contributor Travis Hoium has no positions in the stocks mentioned above. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDrawThe Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2087431, ~/Articles/ArticleHandler.aspx, 4/17/2014 3:11:31 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement