Industrial gas giant Linde reported better-than-expected fourth-quarter results on Thursday, but softer guidance for the year is weighing on its stock. We view that outlook as conservative and likely to be beaten and raised. Revenue for the fourth quarter ended Dec. 31 increased roughly 6% versus the year-ago period, to $8.76 billion, beating the consensus estimate of $8.64 billion compiled by LSEG. Adjusted earnings per share rose nearly 5% year over year to $4.20, exceeding the consensus estimate by two pennies, according to LSEG. LIN YTD mountain Linde 1-year return Bottom line This was a typical Linde quarter: sales grew slightly, with no notable increase in base-volume activity, thanks primarily to higher prices, while management’s long-term emphasis on productivity and cost actions helped deliver strong profitability. An inflection in volume growth would represent significant upside to earnings, as a small lift in volume would lead to sales leverage and a larger impact on profits. But even if volume remains stagnant for another year, Linde can still hit its guidance. Supporting its growth is the backlog, which ended the year at a record $10 billion. This figure doesn’t even include the more than $500 million in investments in rocket propellants for contracted space customers. Linde is known as the Exxon Mobil of the space industry because it’s the chief supplier of liquid oxygen and nitrogen used to support rocket launches. With SpaceX expected to go public later this year at a valuation that could exceed $1 trillion, the space industry could attract significantly more attention. One more item to note is that Linde is currently bidding on a new semiconductor fabrication project, which we believe is with Taiwan Semi . We expect to hear positive news about this in the coming months. Linde’s stock made a very un-Linde-like move from October through early December, falling more than 15% as investors dumped stocks that weren’t participating in the artificial intelligence theme. There was also some consternation about Linde’s ability to deliver its usual 10% annual earnings-per-share growth. Linde stepped up its stock buybacks during that decline, spending $1.4 billion in net repurchases during the quarter, bringing its total for the year to $4.6 billion. While the stock was languishing, the company also spent time talking to the Street, reassuring investors that the long-term earnings story remained intact. In a sign that the stock’s sell-off had become overdone, CEO Sanjiv Lamba’s purchase of $1 million worth of shares on Dec. 8 at $396. His purchase and appearance on “Mad Money” gave us the confidence to upgrade our rating back to a 1 a few days later, at roughly $423. Linde shares are up 10% since that call. We’re only a month and change into the new year, but we’re seeing Linde shares benefiting from investors circling back to non-AI industrials and companies with dependable business models. We don’t know how long this market shift will last, but our investment in Linde is based on fundamentals, not just rotation. We reiterate our 1 rating and are increasing our price target to $510 from $500. Commentary Each of Linde’s global end markets delivered year-over-year sales growth. The strongest one was electronics, where sales grew 7% year over year and 5% sequentially. Next was food and beverage, with sales growth 5% year over year but down 3% sequentially. Chemicals & energy, where sales increased 2% on both a year over year and sequential basis. Manufacturing sales increased 2% year over year as well, but were flat sequentially. Finally, healthcare revenue increased 1% year over year, while metals & mining revenue increased 1% year over year but declined 2% sequentially. Sales for Linde’s Americas segment rose 8% year over year, driven by a 1% benefit from volumes, a 3% tailwind from price/mix, a 2% benefit from cost pass-throughs, and small benefits from currency and acquisitions. The end markets with volume growth were electronics and metals & mining. Asia Pacific (APAC) sales increased 3% year over year, driven by a 2% increase in volumes from the electronics and chemicals & energy end markets. Europe, Middle East & Africa (EMEA) sales increased 6%, but that was mostly driven by an 8% currency tailwind and 1% benefit from price/mix. Volumes fell 3%, mostly due to weakness in manufacturing and chemicals & energy end markets. Sales for engineering , which Linde reports as an operating segment alongside the regional results, fell 2% year over year. Stable margins year over year led to only a small dip in operating profit. Guidance For 2026, Linde expects adjusted earnings per share to grow 6% to 9% year over year to the range of $17.40 to $17.90. This midpoint of $17.65 is slightly below the consensus estimate of $17.86. But we view this estimate as conservative, since the midpoint assumes no economic improvement and zero base volume growth. The company also has a strong track record of beating raising. For the first quarter, Linde expects adjusted earnings per share in the range of $4.20 to $4.30, which is about in line with the consensus estimate of $4.26. (Jim Cramer’s Charitable Trust is long LIN. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . 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Shares of industrial gas giant sink on guidance — why we’re keeping our 1 rating
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