LECO Overview

Investment Insights: Jefferies identifies cheap stocks like Lattice Semiconductor and Entergy as potential outperformers for next year, anticipating broader market growth driven by small- and mid-cap stocks' earnings improvements.

Lattice Semiconductor: The tech stock is highlighted for its strong positions in AI and edge computing, with a price target of $85, suggesting a 21% upside, supported by upcoming catalysts in server deployments and market share gains.

Entergy's Growth Potential: Jefferies rates Entergy as a top utility stock with a $116 price target, citing its strong exposure to data center growth and unprecedented double-digit earnings per share growth among utilities.

Additional Recommendations: Other stocks mentioned by Jefferies that could outperform include Signet Jewelers and Lincoln Electric, emphasizing a focus on companies with improving earnings and sales growth rates.

Analyst Sentiment: Lincoln Electric Holdings' fair value estimate has increased to $260.60, with analysts expressing confidence due to improved operational execution and growing global automation demand. Barclays and Roth Capital have raised their price targets, highlighting the company's strong position in the electrification trend.

Financial Developments: The company completed a buyback of over 216,000 shares and announced a 5.3% increase in its quarterly cash dividend to $0.79 per share, reflecting a commitment to returning value to shareholders.

Growth Strategy: Lincoln Electric is pursuing acquisitions and investments to expand its operations, with its automation business nearing the $1 billion revenue milestone, indicating a focus on growth in both domestic and international markets.

Market Dynamics: While overall analyst sentiment is positive, concerns about valuation and near-term risks in the machinery sector persist, suggesting a cautious outlook amidst shifting market expectations.

Earnings Performance: Lincoln Electric reported an adjusted EPS of $2.47, beating expectations of $2.42, and revenue of $1.06 billion, slightly above the $1.05 billion estimate, with significant profitability gains and record operating cash flow.

Profitability Gains: The company achieved an adjusted operating margin of 17.4%, with adjusted net income rising 21.71% year over year, indicating strong execution and consistent performance.

Revenue Concerns: Despite the revenue beat, organic growth of 5.6% is slowing compared to previous quarters, raising concerns about the core business momentum and market conditions.

Cash Generation and Dividends: Operating cash flow reached a record $236.7 million, allowing for a 5.3% increase in quarterly dividends to $0.79 per share, reflecting confidence in cash generation and shareholder returns.

Third-Quarter Financial Performance: Lincoln Electric Holdings, Inc. reported a net income of $122.6 million for the third quarter, up from $100.8 million the previous year, with earnings per share increasing from $1.77 to $2.21.

Adjusted Earnings Growth: Excluding special items, the adjusted net income rose to $137.2 million or $2.47 per share, compared to $122.4 million or $2.14 per share in the same quarter last year.

Sales Increase: The company experienced a 7.9% increase in sales, reaching $1,061.2 million, driven by a 5.6% rise in organic sales and a 1.7% contribution from acquisitions.

Dividend Declaration: The Board of Directors announced a quarterly cash dividend of $0.79 per share, set to be paid on January 15, 2026, to shareholders recorded by December 31, 2025.