LECO

Lincoln Electric is the global leader in arc-welding and cutting equipment and consumables, and its FY2025 results show the hallmarks of a high-quality industrial compounder. Revenue grew 5.6% to $4.23B while operating income rose 12.8% to $718M and net income climbed 11.7% to $521M, with diluted EPS up 14.4% to $9.32 — the spread between revenue and EPS growth reflecting margin expansion and disciplined share reduction (shares down 2.3%). Gross margin held at 36.2% and operating margin reached 17.0%.

Capital efficiency is the standout: return on equity of 35.4% is exceptional for a manufacturer and signals durable pricing power and a capital-light, consumables-heavy model. Cash generation is strong and consistent — operating cash flow grew 10.4% to $661M against $127M of capex — funding $338M of buybacks (up 28.3%) and $168M of dividends (up 3.8%) while leaving the balance sheet sound: long-term debt was flat at $1.15B with no current debt maturities. Liabilities/equity of 1.57x is elevated optically, but that partly reflects the company's habit of returning capital and running a lean equity base, which is exactly what drives the high ROE.