Yahoo Finance At US$243, Is Lincoln Electric Holdings, Inc. (NASDAQ:LECO) Worth Looking At Closely?
Today we're going to take a look at the well-established Lincoln Electric Holdings, Inc. (NASDAQ:LECO). The company's stock saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQGS. The company is inching closer to its yearly highs following the recent share price climb. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s examine Lincoln Electric Holdings’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
View our latest analysis for Lincoln Electric Holdings
What's The Opportunity In Lincoln Electric Holdings?
According to our valuation model, Lincoln Electric Holdings seems to be fairly priced at around 1.90% above our intrinsic value, which means if you buy Lincoln Electric Holdings today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth $238.04, then there isn’t really any room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because Lincoln Electric Holdings’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will Lincoln Electric Holdings generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Lincoln Electric Holdings' earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? LECO’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on LECO, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
So while earnings quality is important, it's equally important to consider the risks facing Lincoln Electric Holdings at this point in time. For example, we've discovered 2 warning signs that you should run your eye over to get a better picture of Lincoln Electric Holdings.
If you are no longer interested in Lincoln Electric Holdings, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
