Wednesday, July 29, 2015

Seeking Alpha: Lincoln Electric Trying To Manage The Nearly Unmanageable

Between the well-telegraphed declines in oil/gas and shipbuilding and the emerging weakness in heavy manufacturing seen through the reports of companies like Kennametal (NYSE:KMT) and MSC Industrial (NYSE:MSM), the writing was on the wall for Lincoln Electric (NASDAQ:LECO). This well-run welding company is managing the downturn as best it can, but there's only so much the company can do when there is weakness on multiple fronts and little-to-no visibility regarding a turnaround.

Conditions can certainly get worse, but I would like to think that the shares already reflect a pretty unpleasant scenario. My base case fair value on the shares is around $67, but another 10% cut to 2015 and 2016 expectations would still suggest today's price is about 5% too low. That's not quite "heads I win; tails I don't lose", but it's close enough to have my bumping this name up my watch/buy list as short-term problems muddy the waters for a proven performer.

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Lincoln Electric Trying To Manage The Nearly Unmanageable

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