Is The Buyback The Reason To Own Lincoln Electric Stock?
Lincoln Electric (LECO) makes welding equipment and the consumables that go with it. The stock is up 7.4% over the past twelve months, has slipped over the past three months, and sits about 15% below its 52-week high. Owners are usually pointed to the buyback as the reason to sit tight. The buyback is real and fully paid for, but it is smaller than the story built around it.
Why You Own More Of Lincoln Electric Than You Did A Year Ago
The company retired 1.6% of its shares over the past year. You did nothing, and your claim on its profits grew. Over the past three years net income rose 5.2% a year on average. Earnings per share rose 6.9% a year on average, and the gap is the stock retired along the way, which is what reaches an owner.
Add the dividend, and the two together come to a 2.6% total shareholder yield on the market value, after allowing for the stock handed to employees. The yield is a real return of cash, paid every year, and a modest one next to what the shares cost.
How Lincoln Electric Pays For Retiring Its Own Stock
The money comes from the welding business itself. Lincoln Electric threw off about $688 million of operating cash flow over the past twelve months and spent about $145 million of it on plant and equipment. What is left covers the buyback and the dividend about 1.3 times over. Net debt runs about 1.0 times EBITDA, a modest load.
Few investors ever see how that business works. The company sells the equipment once, then sells the consumables that keep it running for years. Consumable demand repeats, while equipment and automation move with the industrial cycle. Volumes turned higher across all three product areas in the second quarter of 2026, led by Americas Welding, the first volume growth management has seen after nine quarters of decline.
So Are You Paying For The Buyback Or The Welding Cycle?
That shareholder yield does not come cheap. What you are paying for is the Americas’ recovery continuing. In late July management raised its full-year 2026 sales assumptions and now expects organic sales to grow at a high single-digit to low double-digit percent rate, about two-thirds of it price and one-third volume. Behind that raise sit a record backlog and general fabrication organic sales up over 30% in the second quarter of 2026.
The other side of the company is not cooperating. International welding sales rose 4.5% in the second quarter of 2026, but only on an acquisition, price, and currency: volumes fell about 5% on weak European demand. Management guided that segment’s margin to a 10% to 11% range for full-year 2026.
A shrinking share count does not protect you from a de-rating. At 26.5 times trailing earnings, the shares look fair rather than cheap, and the buyback is a rebate on the ticket, not the reason to buy it. The stock is already off its high, so the live question is whether this kind of pullback is the one worth buying.
So Is Lincoln Electric Fast Enough For You?
Maybe, if you want the cash more than the growth, you can wait for it. A three-year record this modest, bought at a full price, asks for patience. It is worth seeing how other companies hand cash back to their owners. And if you would rather not make that call at all, look at the Trefis High Quality Portfolio. That portfolio has a track record of outpacing the three major indices.