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Lincoln Electric Holdings Piotroski F-Score

: 5 (As of Today)
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The zones of discrimination were as such:

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Lincoln Electric Holdings has an F-score of 5 indicating the company's financial situation is typical for a stable company.

NAS:LECO' s Piotroski F-Score Range Over the Past 10 Years
Min: 4   Med: 6   Max: 9
Current: 5

4
9

During the past 13 years, the highest Piotroski F-Score of Lincoln Electric Holdings was 9. The lowest was 4. And the median was 6.


Lincoln Electric Holdings Piotroski F-Score Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

Lincoln Electric Holdings Annual Data
Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19
Piotroski F-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 6.00 7.00 6.00 6.00 6.00

Lincoln Electric Holdings Quarterly Data
Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20
Piotroski F-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 6.00 6.00 5.00 4.00 5.00

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.


Lincoln Electric Holdings Piotroski F-Score Distribution

* The bar in red indicates where Lincoln Electric Holdings's Piotroski F-Score falls into.


How is the Piotroski F-Score calculated?

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep20) TTM:Last Year (Sep19) TTM:
Net Income was 63.716 + 55.562 + 26.996 + 58.479 = $205 Mil.
Cash Flow from Operations was 122.519 + 21.972 + 104.041 + 89.548 = $338 Mil.
Revenue was 736.307 + 701.991 + 590.727 + 668.888 = $2,698 Mil.
Gross Profit was 240.934 + 237.322 + 189.378 + 215.387 = $883 Mil.
Average Total Assets from the begining of this year (Sep19)
to the end of this year (Sep20) was
(2361.16 + 2371.213 + 2305.9 + 2199.039 + 2217.499) / 5 = $2290.9622 Mil.
Total Assets at the begining of this year (Sep19) was $2,361 Mil.
Long-Term Debt & Capital Lease Obligation was $753 Mil.
Total Current Assets was $1,026 Mil.
Total Current Liabilities was $533 Mil.
Net Income was 86.839 + 71.48 + 85.452 + 72.461 = $316 Mil.

Revenue was 743.827 + 759.174 + 777.008 + 730.783 = $3,011 Mil.
Gross Profit was 250.299 + 258.421 + 269.881 + 238.351 = $1,017 Mil.
Average Total Assets from the begining of last year (Sep18)
to the end of last year (Sep19) was
(2419.645 + 2349.825 + 2354.851 + 2394.333 + 2361.16) / 5 = $2375.9628 Mil.
Total Assets at the begining of last year (Sep18) was $2,420 Mil.
Long-Term Debt & Capital Lease Obligation was $714 Mil.
Total Current Assets was $1,082 Mil.
Total Current Liabilities was $572 Mil.

*Note: If the latest quarterly/semi-annual/annual total assets data is 0, then we will use previous quarterly/semi-annual/annual data for all the items in the balance sheet.

Profitability

Question 1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by Total Assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Lincoln Electric Holdings's current Net Income (TTM) was 205. ==> Positive ==> Score 1.

Question 2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by Total Assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Lincoln Electric Holdings's current Cash Flow from Operations (TTM) was 338. ==> Positive ==> Score 1.

Question 3. Change in Return on Assets

Compare this year's return on assets (1) to last year's return on assets.

Score 1 if it's higher, 0 if it's lower.

ROA (This Year)=Net Income/Total Assets (Sep19)
=204.753/2361.16
=0.08671712

ROA (Last Year)=Net Income/Total Assets (Sep18)
=316.232/2419.645
=0.13069355

Lincoln Electric Holdings's return on assets of this year was 0.08671712. Lincoln Electric Holdings's return on assets of last year was 0.13069355. ==> Last year is higher ==> Score 0.

Question 4. Quality of Earnings (Accrual)

Compare Cash flow return on assets (2) to return on assets (1)

Score 1 if CFROA > ROA, 0 if CFROA <= ROA.

Lincoln Electric Holdings's current Net Income (TTM) was 205. Lincoln Electric Holdings's current Cash Flow from Operations (TTM) was 338. ==> 338 > 205 ==> CFROA > ROA ==> Score 1.

Funding

Question 5. Change in Gearing or Leverage

Compare this year's gearing (long-term debt divided by average total assets) to last year's gearing.

Score 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Sep20)=Long-Term Debt & Capital Lease Obligation/Average Total Assets from Sep19 to Sep20
=752.636/2290.9622
=0.32852397

Gearing (Last Year: Sep19)=Long-Term Debt & Capital Lease Obligation/Average Total Assets from Sep18 to Sep19
=713.884/2375.9628
=0.30046093

Lincoln Electric Holdings's gearing of this year was 0.32852397. Lincoln Electric Holdings's gearing of last year was 0.30046093. ==> Last year is lower than this year ==> Score 0.

Question 6. Change in Working Capital (Liquidity)

Compare this year's current ratio (current assets divided by current liabilities) to last year's current ratio.

Score 1 if this year's current ratio is higher, 0 if it's lower

Current Ratio (This Year: Sep20)=Total Current Assets/Total Current Liabilities
=1026.211/533.161
=1.92476757

Current Ratio (Last Year: Sep19)=Total Current Assets/Total Current Liabilities
=1082.434/572.437
=1.89092249

Lincoln Electric Holdings's current ratio of this year was 1.92476757. Lincoln Electric Holdings's current ratio of last year was 1.89092249. ==> This year's current ratio is higher. ==> Score 1.

Question 7. Change in Shares in Issue

Compare the number of shares in issue this year, to the number in issue last year.

Score 0 if there is larger number of shares in issue this year, 1 otherwise.

Lincoln Electric Holdings's number of shares in issue this year was 60.018. Lincoln Electric Holdings's number of shares in issue last year was 62.061. ==> There is smaller number of shares in issue this year, or the same. ==> Score 1.

Efficiency

Question 8. Change in Gross Margin

Compare this year's gross margin (Gross Profit divided by sales) to last year's.

Score 1 if this year's gross margin is higher, 0 if it's lower.

Gross Margin (This Year: TTM)=Gross Profit/Revenue
=883.021/2697.913
=0.3272978

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=1016.952/3010.792
=0.33776893

Lincoln Electric Holdings's gross margin of this year was 0.3272978. Lincoln Electric Holdings's gross margin of last year was 0.33776893. ==> Last year's gross margin is higher ==> Score 0.

Question 9. Change in asset turnover

Compare this year's asset turnover (total sales for the year divided by total assets at the beginning of the year) to last year's asset turnover ratio.

Score 1 if this year's asset turnover ratio is higher, 0 if it's lower

Asset Turnover (This Year)=Revenue/Total Assets at the Beginning of This Year (Sep19)
=2697.913/2361.16
=1.14262185

Asset Turnover (Last Year)=Revenue/Total Assets at the Beginning of Last Year (Sep18)
=3010.792/2419.645
=1.24431146

Lincoln Electric Holdings's asset turnover of this year was 1.14262185. Lincoln Electric Holdings's asset turnover of last year was 1.24431146. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=1+1+0+1+0+1+1+0+0
=5

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Lincoln Electric Holdings has an F-score of 5 indicating the company's financial situation is typical for a stable company.

Lincoln Electric Holdings  (NAS:LECO) Piotroski F-Score Explanation

The developer of the system is Joseph D. Piotroski is relatively unknown accounting professor who shuns publicity and rarely gives interviews.

He graduated from the University of Illinois with a B.S. in accounting in 1989, received an M.B.A. from Indiana University in 1994. Five years later, in 1999, after earning a Ph.D. in accounting from the University of Michigan, he became an associate professor of accounting at the University of Chicago.

In 2000, he wrote a research paper called "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers" (pdf).

He wanted to see if he can develop a system (using a simple nine-point scoring system) that can increase the returns of a strategy of investing in low price to book (referred to in the paper as high book to market) value companies.

What he found was something that exceeded his most optimistic expectations.

Buying only those companies that scored highest (8 or 9) on his nine-point scale, or F-Score as he called it, over the 20 year period from 1976 to 1996 led to an average out-performance over the market of 13.4%.

Even more impressive were the results of a strategy of investing in the highest F-Score companies (8 or 9) and shorting companies with the lowest F-Score (0 or 1).

Over the same period from 1976 to 1996 (20 years) this strategy led to an average yearly return of 23%, substantially outperforming the average S&P 500 index return of 15.83% over the same period.


Lincoln Electric Holdings Piotroski F-Score Related Terms


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