Value
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.8 |
| P/S | 8.1 |
| EV/EBITDA | 1.1 |
| Fwd P/E | 6.0 |
| PEG | 4.8 |
| Analyst target | 4.0 |
- ▸Forward P/E: 21.5x
- ▸PEG: 1.70
LECO · Why this verdict
Why Lincoln Electric Holdings (LECO) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.4/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Trading above all major moving averages following a golden cross, with a bullish MACD and rising on-balance volume, the stock exhibits consistent demand-driven price action that typically reflects genuine institutional interest. Momentum breakdown | Stock maintains its position above the 200-day moving average and RSI holds above 50 for the next six months without a death cross reversal. | →Stable |
| CounterWith the stock trading above its calculated price target, the breakout is occurring into thin upside headroom — continuation requires analyst targets to be revised higher, which depends on future earnings delivery rather than current momentum alone. | ||
The company has beaten consensus estimates in each of the last four quarters, beginning with a 12% positive surprise in the oldest quarter of the streak followed by three more recent modest beats, reflecting a disciplined pattern of consistent execution above initial guidance. Earnings | The beat streak continues for at least 3 of the next 4 quarters, with average EPS surprise staying above 2%. | →Stable |
| CounterThe three most recent beats have been narrow — ranging from 2% to 4% — suggesting the earnings trajectory may be maturing and that the pattern of consistent but thin outperformance offers diminishing lift to the stock price over time. | ||
A return on equity of 38% alongside a Piotroski F-Score of 8 out of 9 mark the company as a financially sound franchise, with assets deployed efficiently and balance sheet health well above sector average. Quality breakdown | Return on equity stays above 25% and Piotroski F-Score remains at 7 or higher for the next four quarters. | →Stable |
| CounterFree cash flow is converting at only 33% of net income — flagged as a quality red flag — meaning the earnings reported on the income statement are not being realized in cash at the same rate, which can limit actual capital available for dividends, buybacks, or reinvestment. | ||
The stock now trades above its price target, leaving the reward-to-risk geometry unfavorable and no material near-term headroom to the analyst consensus — making the case for new entry difficult to justify at current levels. Bear case | Consensus analyst price targets are revised above $295 — more than 10% above the current price of $267.86 — within 12 months, restoring a geometry that supports entry. | →Stable |
| CounterA high-quality franchise with an 8 out of 9 Piotroski score and a 38% return on equity may warrant a premium to prior analyst targets; if the earnings beat streak continues and estimates are revised upward, the current price could become a new fair-value floor rather than a ceiling. | ||
Trading above all major moving averages following a golden cross, with a bullish MACD and rising on-balance volume, the stock exhibits consistent demand-driven price action that typically reflects genuine institutional interest.
→StableMomentum breakdown
- Expectation
- Stock maintains its position above the 200-day moving average and RSI holds above 50 for the next six months without a death cross reversal.
CounterWith the stock trading above its calculated price target, the breakout is occurring into thin upside headroom — continuation requires analyst targets to be revised higher, which depends on future earnings delivery rather than current momentum alone.
The company has beaten consensus estimates in each of the last four quarters, beginning with a 12% positive surprise in the oldest quarter of the streak followed by three more recent modest beats, reflecting a disciplined pattern of consistent execution above initial guidance.
→StableEarnings
- Expectation
- The beat streak continues for at least 3 of the next 4 quarters, with average EPS surprise staying above 2%.
CounterThe three most recent beats have been narrow — ranging from 2% to 4% — suggesting the earnings trajectory may be maturing and that the pattern of consistent but thin outperformance offers diminishing lift to the stock price over time.
A return on equity of 38% alongside a Piotroski F-Score of 8 out of 9 mark the company as a financially sound franchise, with assets deployed efficiently and balance sheet health well above sector average.
→StableQuality breakdown
- Expectation
- Return on equity stays above 25% and Piotroski F-Score remains at 7 or higher for the next four quarters.
CounterFree cash flow is converting at only 33% of net income — flagged as a quality red flag — meaning the earnings reported on the income statement are not being realized in cash at the same rate, which can limit actual capital available for dividends, buybacks, or reinvestment.
The stock now trades above its price target, leaving the reward-to-risk geometry unfavorable and no material near-term headroom to the analyst consensus — making the case for new entry difficult to justify at current levels.
→StableBear case
- Expectation
- Consensus analyst price targets are revised above $295 — more than 10% above the current price of $267.86 — within 12 months, restoring a geometry that supports entry.
CounterA high-quality franchise with an 8 out of 9 Piotroski score and a 38% return on equity may warrant a premium to prior analyst targets; if the earnings beat streak continues and estimates are revised upward, the current price could become a new fair-value floor rather than a ceiling.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Lincoln Electric is a financially sound industrial franchise — with a 38% return on equity, a Piotroski F-Score of 8 out of 9, and four straight earnings beats — but with the stock now trading above its price target and free cash flow converting at only 33% of stated earnings, the margin of safety for new entry has largely been consumed.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 8.2 |
| Gross margin | 3.2 |
| Op margin | 6.9 |
| Net margin | 6.2 |
| Current ratio | 6.5 |
| FCF quality | 2.6 |
| Moat | 6.8 |
| Piotroski F | 8.9 |
- ▸Excellent ROE: 38%
- ▸Earnings quality RED FLAG: 33% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
Growth
5.5/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.4 |
| EPS growth | 5.5 |
Momentum
2.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 4.0 |
| Volume | 2.0 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 7.1 |
| erm sentiment | 5.0 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
5.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.4 |
| quality rank | 7.5 |
| growth rank | 6.3 |
- ▸Superior ROE vs peers
Technical
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 7.5 |
| support resistance | 7.3 |
| 52w position | 6.8 |
Risk (lower is worse)
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.7 |
| days to cover | 6.7 |
| volatility | 5.1 |
| put call | 1.2 |
| implied vol | 5.7 |
| beta | 6.2 |
| debt equity | 5.6 |
- ▸Elevated put/call: 1.82
Catalyst
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 5.2 |
| dividend safety | 5.2 |
- ▸Perfect beat streak: 4Q
- ▸Dividend: 122.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:26d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:2.5<4.5
- ASYMMETRY:-0.0=NEGATIVE
Warning (0)
none
Reward-to-Risk
-0.02
Upside
-0.1%
Downside
5.9%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeCatalyst-Driven — Earnings in 26d with 4/4 beat streak
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.4 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Technical at 7.2) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:2.5<4.5, ASYMMETRY:-0.0=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.02 — supplementary context, not the trigger for this path.
The strongest dimensions are Technical at 7.2, Quality at 6.6, and Catalyst at 6.1; the weakest are Momentum at 2.5, Value at 4.8, and Insider at 5.0. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of -0.02 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Strong Price Momentum Breakout
Trip ifStock falls below the 200-day moving average for more than 10 consecutive trading days.
- P2Consistent Earnings Outperformance
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P3High Quality Business Fundamentals
Trip ifReturn on equity falls below 25% for 2 consecutive quarters.
- P4Price Above Target Limits Upside
Trip ifConsensus analyst price target is revised above $295 — more than 10% above the current price of $267.86 — within 12 months.