Linde on Friday reported better-than-expected quarterly results Thursday, showcasing what the industrial gas giant does best when times get tough. Revenue for the first quarter ended June 30, increased roughly 3% versus the year-ago period, coming in at $8.5 billion, ahead of the the LSEG compiled analysts’ consensus estimate of $8.35 billion. Adjusted earnings per share rose just over 6% year over year to $4.09, also outpacing the $4.03 expected, according to LSEG. Bottom line Linde delivered in a difficult operating environment — which is exactly why you own the stock. The company is a critical supplier so high up in the supply chain of so many various industries that it has the kind of superior pricing power that allows it to keep growing earnings no matter the backdrop. Case in point: Management raised the low end of its full-year earnings guidance, despite noting that the high end of the range already assumes an economic contraction. “Linde has always achieved positive pricing mix being — you know, be it through economic cycles which are up or down,” CEO Sanjiv Lamba explained in the post-earnings call with investors. “And I think I’d say to you that remains the expectation going forward as well. A great proxy for our pricing is globally weighted CPI. You should see us track to that as we do at the moment. And I guess when I look at pricing today and you can see the numbers as we provided in the deck, you’ll see that pricing across all countries is actually pursuing that and in line with that globally weighted CPI.” One exception, said Lamba, is China, where sales are expected to remain flat for the year. Linde Why we own it: The industrial gas supplier and engineering firm has a stellar track record of consistent earnings growth. Its exposure to a wide range of industries, such as health care and electronics, and geographies — paired with excellent executive leadership and disciplined capital management — has been a recipe for steady success that should continue. Competitors: Air Liquid and Air Products Most recent buy : Dec. 18, 2024 Initiated : Feb. 18, 2021 Cash flow missed analyst estimates, but the first half of the year tends to be weaker due to the timing of tax payments, interest and employee incentive compensation. As a result, we should see improvement in the back half of the year. More importantly, the company’s sale of gas backlog ended the quarter at record $7.1 billion, nearly double the level at the end of 2020. The backlog is a key item for investors to be mindful of as it serves to ensure future growth for the company. However, that’s only true should the projects in the backlog actually come to fruition. In Linde’s case, the company has strict requirements for what it will include in the calculation of the backlog, which allows investors to forecast future growth as a result of the backlog with a relatively high degree of confidence. “Unlike others in the industry, Linde’s definition has been clear and…
Read More: We own Linde to deliver in tough times. It didn’t disappoint this quarter
