Zacks_Analysts' Blog : LECO Wraps Up Severstal Buy - Analyst Blog

Lincoln Electric Holdings Inc. (LECO) wrapped up the acquisition of Russia-based leading manufacturer of welding consumables, OOO Severstal-metiz: Welding Consumables. The transaction includes acquiring manufacturing operations as well as exclusive distribution rights of the Severstal brand of welding products.

Severstal-metiz Welding Consumables is the subsidiary of Severstal-metiz and produces a wide range of electrodes, welding wire for the pipe industry and flux-cored welding wire. The Severstal-metiz group of companies incorporates all the metalware assets of OAO Severstal, one of the world's leading vertically integrated steel and mining companies with key assets in Russia, the US and Europe.

This acquisition will enhance Lincoln Electric’s manufacturing capacity in the fast growing markets of Russia and Commonwealth of Independent States (CIS). This acquisition complements Lincoln Electric’s another recent buy, that of Russia-based welding wire manufacturer Mezhgosmetiz-Mtsensk OAO, in October.

OOO Severstal-metiz: Welding Consumables provides Lincoln with its first manufacturing operation in Russia, as well as distribution channels to serve the growing Russian and CIS welding markets.

These acquisitions are likely to strengthen Lincoln's presence in the Russian market. In addition to the above acquisitions, the company also partnered with IPG Photonics Corporation to explore global opportunities in the high-power laser welding and cutting market.

Lincoln delivered adjusted earnings of 90 cents per share in its fourth quarter, ahead of the Zacks Consensus Estimate of 82 cents as well as 65 cents earned in the year-ago quarter.

The Zacks Consensus Estimate for first-quarter 2011 is 85 cents per share. For full years 2011 and 2012, the Zacks Consensus Estimates are, respectively, $3.84 per share and $4.62 per share.

We maintain our long-term Outperform recommendation on Lincoln Electric. The quantitative Zacks #1 Rank (short term Strong Buy rating) for the company indicates upward pressure on the stock over the near term.

Cleveland, Ohio-based Lincoln Electric deigns, develops and manufactures arc welding products, robotic arc-welding systems, plasma and oxyfuel cutting equipment and commands a leading position in the brazing and soldering alloys market. Lincoln Electric competes with Illinois Tool Works Inc. (ITW),Charter International Plc and ESAB Group Holdings Ltd.