Welding equipment manufacturer Lincoln Electric (NASDAQ: LECO) reported revenue ahead of Wall Street’s expectations in Q2 CY2026, with sales up 12% year on year to $1.22 billion. Its non-GAAP profit of $2.93 per share was 4.3% above analysts’ consensus estimates.

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Company Overview

Headquartered in Ohio, Lincoln Electric (NASDAQ: LECO) manufactures and sells welding equipment for various industries.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Luckily, Lincoln Electric’s sales grew at a decent 8.7% compounded annual growth rate over the last five years. Its growth was slightly above the average industrials company and shows its offerings resonate with customers.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Lincoln Electric’s recent performance shows its demand has slowed as its annualized revenue growth of 4.6% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs.

We can better understand the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Lincoln Electric’s organic revenue averaged 1.3% year-on-year growth. Because this number is lower than its two-year revenue growth, we can see that some mixture of acquisitions and foreign exchange rates boosted its headline results.

This quarter, Lincoln Electric reported year-on-year revenue growth of 12%, and its $1.22 billion of revenue exceeded Wall Street’s estimates by 4.6%.

Looking ahead, sell-side analysts expect revenue to grow 5% over the next 12 months, similar to its two-year rate. This projection is underwhelming and suggests its newer products and services will not accelerate its top-line performance yet.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses — everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Lincoln Electric has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 16.5%. This result isn’t too surprising as its gross margin gives it a favorable starting point.

Analyzing the trend in its profitability, Lincoln Electric’s operating margin rose by 1.2 percentage points over the last five years, as its sales growth gave it operating leverage.

This quarter, Lincoln Electric generated an operating margin profit margin of 18.1%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Lincoln Electric’s EPS grew at 14.4% compounded annual growth rate over the last five years, higher than its 8.7% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into Lincoln Electric’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, Lincoln Electric’s operating margin was flat this quarter but expanded by 1.2 percentage points over the last five years. On top of that, its share count shrank by 8.4%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Lincoln Electric, its two-year annual EPS growth of 5.8% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q2, Lincoln Electric reported adjusted EPS of $2.93, up from $2.60 in the same quarter last year. This print beat analysts’ estimates by 4.3%. Over the next 12 months, Wall Street expects Lincoln Electric’s full-year EPS to grow 10.1% from $10.55 to $11.61.

Key Takeaways from Lincoln Electric’s Q2 Results

We were impressed by how significantly Lincoln Electric blew past analysts’ revenue expectations this quarter. We were also glad its adjusted operating income outperformed Wall Street’s estimates. On the other hand, its organic revenue missed. Zooming out, we think this was a mixed quarter. The stock traded up 2.9% to $265.40 immediately following the results.

So should you invest in Lincoln Electric right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).