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LIN:DEU – Market expectations are for record-high Uniform ROA, but management has concerns about margins, growth, and guidance

January 22, 2018

  • Linde Aktiengesellschaft (LIN:DEU) currently trades near historical highs relative to UAFRS-based (Uniform) Assets, with a 1.7x Uniform P/B, suggesting fairly bullish expectations for the firm. However, management has concerns about margins, growth, and guidance
  • Specifically, management may lack confidence in the sustainability of their operating profit margin in the engineering division, and may have concerns about their ability to maintain growth in contributions from start-ups and ramp-ups in all operating segments. Furthermore, they may be concerned about the sustainability of growth in Asia, and may be exaggerating the progress they’ve made regarding the implementation of associated measures in the LIFT program. Finally, they may lack confidence in their midterm guidance for Q4 performance

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