Linde beats estimates, lifts outlook on strong cash generation
Industrial gas leader targets 6-9% EPS growth in 2026 after delivering $10.4B operating cash flow
Linde plc shares advanced more than 2% on Thursday after the industrial gas company reported fourth-quarter earnings that exceeded Wall Street expectations and issued upbeat guidance for 2026, demonstrating resilience despite broader industrial headwinds.
The world's largest industrial gas producer reported adjusted earnings per share of $4.20 for the final quarter of 2025, surpassing analyst estimates by $0.02. Revenue reached $8.764 billion, topping the Zacks Consensus Estimate by 2.37% and reflecting 6% year-over-year growth.
The strong performance was underpinned by expanding profitability, with the company's adjusted operating profit margin reaching 29.5% in the quarter. Operating cash flow for the full year totaled $10.4 billion, while return on capital climbed to 24.2%, demonstrating Linde's ability to generate premium returns on capital deployment.
"We delivered another year of strong financial performance, with disciplined execution across our businesses," the company stated in its earnings release, highlighting its focus on operational excellence and capital allocation.
Looking ahead, Linde provided guidance that suggests continued growth momentum. For the first quarter of 2026, the company expects adjusted earnings per share between $4.20 and $4.30, exceeding the consensus estimate of $4.24. More significantly, full-year 2026 guidance calls for adjusted EPS of $17.40 to $17.90, representing 6-9% growth over 2025 levels of $16.46.
The upbeat outlook comes after what had been a challenging period for industrial gas stocks. Shares of Linde had declined nearly 10% in the fourth quarter of 2025 as investors worried about a persistent industrial gas volume recession, economic stagnation in Europe, and suppressed demand in China. Thursday's earnings report appears to have alleviated some of those concerns.
Linde's capital allocation strategy remains a key attraction for investors. The company returned $7.4 billion to shareholders in 2025 through a combination of dividends and share buybacks, maintaining a long track record of delivering cash returns to its investor base. The stock currently yields 1.3% and has 23 analysts rating it a buy or strong buy, compared to just four recommending hold or sell.
The company's position as a critical supplier to diverse industries—including healthcare, manufacturing, aerospace, and energy—provides relative stability even during economic cycles. Linde's expertise in atmospheric gases such as oxygen, nitrogen, and hydrogen has positioned it as a key player in the global transition to cleaner energy sources, particularly in developing hydrogen infrastructure.
With a market capitalization of $217 billion and a forward price-to-earnings ratio of 25.7, Linde trades at a premium to broader market averages. However, the company's consistent earnings beats, expanding margins, and strong cash generation have historically justified that valuation premium among investors seeking exposure to the industrial gases sector.
The shares, which closed Thursday at $473.33, remain below their 52-week high of $483.05 reached earlier in the year, suggesting room for further recovery if the company can execute on its 2026 growth targets. The consensus analyst price target of $502.85 implies approximately 6% upside from current levels.