{"id":44302,"date":"2023-08-04T02:26:33","date_gmt":"2023-08-04T06:26:33","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/linde-double-digit-eps-growth-buy-confirmed-nyselin\/"},"modified":"2023-08-04T02:26:36","modified_gmt":"2023-08-04T06:26:36","slug":"linde-double-digit-eps-growth-buy-confirmed-nyselin","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=44302","title":{"rendered":"Linde: Double-Digit EPS Growth, Buy Confirmed (NYSE:LIN)"},"content":{"rendered":"
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<\/picture>
<\/figcaption><\/figure>\n<\/p>\n

Here at the Lab, we have always been supported by Linde PLC (NYSE:LIN<\/span>) development. In our initiation of coverage titled “Defensiveness At A Discount<\/em>,” we highlighted MACRO and MICRO’s potential upside backed by Linde’s downside protection competitive on end-customer contracts. Indeed, the company’s clients have a decade-long contract with margin and volume guarantees (with a full pass-through on energy price development). In addition, as emphasized in <\/span>Q4 and Q1 results, we were ahead of Wall Street estimates and continued increasing our target price (i.e.,<\/span> Another Beat, Another Raise<\/em>).<\/span><\/p>\n

\n

\"Mare<\/span>
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Mare Past Analysis<\/p>\n<\/figcaption><\/figure>\n<\/p>\n

Q2 results<\/h2>\n

Linde reported a turnover of $8.20 billion in Q2. The top-line sales decreased by 3% on a yearly basis and by 4% versus Wall Street analyst expectations. Having analyzed Air Liquide Q2 financial figures, we are not surprised by a negative sales growth trajectory. As a reminder, Air Liquide sales were down by 7%. Therefore, Linde is gaining market share. (Today, we will also check <\/span>Air Products and Chemicals Q2 results). Linde Q2’s core operating profit reached $2.28 billion and was up by 15% on a yearly comparison and again was a beat vs consensus. Even if sales decreased, organic turnover increased by 6%. This is because energy costs are going down, but prices were up by 7%, with volume only down by 1%. In detail, the energy cost <\/span>pass-through<\/em> recorded a negative performance of -4% and a minus 1% on currency effect. Looking at the GEO level, the Q2 core operating profit margin increased by 440 basis points to 27.9% (up by 350 basis points excluding energy). The Americas was up 5% in the regions with lower volume due to customer industrial slowdown; however, EBIT margin increased. The EMEA area, the negative outlier, was back to growth and reported a 350 basis point increase in EBIT margin, thanks to prices up by 11%. Volumes are still down by 4%, with weakness in clientele business onsite, particularly in the chemicals. At the same time, the APAC region volume increased by 5% and 7% yearly and quarterly, respectively. For this reason, Linde’s adj. EPS reached $3.57 (up 15%) and 3% ahead of consensus.<\/span><\/p>\n

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\"Linde<\/span>
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Linde Q2 Financials in a Snap<\/p>\n<\/figcaption><\/figure>\n<\/p>\n

It is vital to report that Linde raised its Fiscal Year 2023 guidance. The company’s management increased the EPS outlook from $13.45 – $13.85 to $13.80 – $14.00, assuming no impact from currency. In addition, Linde’s upper-end guidance assumes no economic improvement. The guidance mid-point is now at $13.90 and represents a 13% growth on a yearly basis and is up by 1% compared to Wall Street estimates.<\/p>\n

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\"Linde<\/span>
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Linde Full Year 2023 Outlook<\/p>\n<\/figcaption><\/figure>\n<\/p>\n

Mare Upside<\/h4>\n
    \n
  1. Following the quarterly results, we are now guiding a Q3 EPS at the Linde upper end at $3.58 and above Visible Alpha consensus;<\/li>\n
  2. Linde net debt reached $14.1 billion and was $13.8 billion at Q1 end. This was due to ongoing buybacks of $1.7 billion and dividend payments of $1.2 billion. The company’s free cash flow was $1.3 billion with an operating profit of $2.2 billion and CAPEX of $0.9 billion;<\/li>\n
  3. On the CAPEX outlook, we continue the guidance high-end of $4 billion for the fiscal year 2023;<\/li>\n
  4. Order backlog continues to be supportive (Fig 1);<\/li>\n
  5. Linde Is Set To Growth with sustainable value creation (Fig 2) and a double-digit EPS growth rate. This is backed by the ongoing energy revolution US IRA framework’s potential and the EU response.<\/li>\n<\/ol>\n

    \n

    \"Linde<\/span>
    \n

    Linde order backlog<\/p>\n<\/figcaption><\/figure>\n<\/p>\n

    Fig 1<\/p>\n

    \n

    \"Linde<\/span>
    \n

    Linde value creation<\/p>\n<\/figcaption><\/figure>\n<\/p>\n

    Fig 2<\/p>\n

    Conclusion and Valuation<\/h2>\n

    Linde’s stock price reacted positively as the company continued to deliver double-digit EPS growth supported by solid cash generation. Last time, we increased our price target to $370 per share. Today, Linde is trading at $388 per share. Rolling forward our estimates, we arrived at a year-end net debt of $13.3 billion, and our twelve-month EBITDA reached $13.75 billion. Applying an unchanged EBITDA multiple of 15x (in line with our historical valuation), we increased our target price to $400 per share. Downside risks are included in our initiation of coverage.<\/p>\n<\/div>\n

    Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

    Here at the Lab, we have always been supported by Linde PLC (NYSE:LIN) development. In our initiation of coverage titled “Defensiveness At A Discount,” we highlighted MACRO and MICRO’s potential upside backed by Linde’s downside protection competitive on end-customer contracts. Indeed, the company’s clients have a decade-long contract with margin and volume guarantees (with a […]<\/p>\n","protected":false},"author":1,"featured_media":44303,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[236],"tags":[83],"class_list":["post-44302","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-news","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nLinde: Double-Digit EPS Growth, Buy Confirmed (NYSE:LIN) | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Here at the Lab, we have always been supported by Linde PLC (NYSE:LIN) development. 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