LINCOLN ELECTRIC HOLDINGS (LECO) Stock Fundamental Analysis
USA - NASDAQ:LECO - US5339001068 - Common Stock
242.21 USD
+3.28 (+1.37%)
242.21 USD
0 (0%)
LECO gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 130 industry peers in the Machinery industry. LECO gets an excellent profitability rating and is at the same time showing great financial health properties. LECO is quite expensive at the moment. It does show a decent growth rate.
1. Profitability
1.1 Basic Checks
In the past year LECO was profitable.
In the past year LECO had a positive cash flow from operations.
In the past 5 years LECO has always been profitable.
In the past 5 years LECO always reported a positive cash flow from operatings.
1.2 Ratios
The Return On Assets of LECO (13.49%) is better than 91.54% of its industry peers.
The Return On Equity of LECO (36.45%) is better than 96.15% of its industry peers.
LECO has a better Return On Invested Capital (21.01%) than 97.69% of its industry peers.
The Average Return On Invested Capital over the past 3 years for LECO is significantly above the industry average of 10.00%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 13.49% | ||
| ROE | 36.45% | ||
| ROIC | 21.01% |
ROA(3y)14.74%
ROA(5y)12.76%
ROE(3y)40.81%
ROE(5y)36.11%
ROIC(3y)21.22%
ROIC(5y)19.81%
1.3 Margins
LECO's Profit Margin of 12.27% is amongst the best of the industry. LECO outperforms 83.08% of its industry peers.
In the last couple of years the Profit Margin of LECO has grown nicely.
LECO has a better Operating Margin (17.58%) than 82.31% of its industry peers.
LECO's Operating Margin has improved in the last couple of years.
LECO's Gross Margin of 36.51% is fine compared to the rest of the industry. LECO outperforms 66.15% of its industry peers.
In the last couple of years the Gross Margin of LECO has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 17.58% | ||
| PM (TTM) | 12.27% | ||
| GM | 36.51% |
OM growth 3Y4.56%
OM growth 5Y5.34%
PM growth 3Y10.79%
PM growth 5Y3.57%
GM growth 3Y3.53%
GM growth 5Y1.97%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), LECO is creating value.
LECO has less shares outstanding than it did 1 year ago.
Compared to 5 years ago, LECO has less shares outstanding
The debt/assets ratio for LECO is higher compared to a year ago.
2.2 Solvency
LECO has an Altman-Z score of 6.90. This indicates that LECO is financially healthy and has little risk of bankruptcy at the moment.
LECO has a better Altman-Z score (6.90) than 88.46% of its industry peers.
The Debt to FCF ratio of LECO is 2.49, which is a good value as it means it would take LECO, 2.49 years of fcf income to pay off all of its debts.
LECO has a better Debt to FCF ratio (2.49) than 73.85% of its industry peers.
A Debt/Equity ratio of 0.84 indicates that LECO is somewhat dependend on debt financing.
The Debt to Equity ratio of LECO (0.84) is worse than 73.85% of its industry peers.
Although LECO does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.84 | ||
| Debt/FCF | 2.49 | ||
| Altman-Z | 6.9 |
ROIC/WACC2.27
WACC9.25%
2.3 Liquidity
A Current Ratio of 1.68 indicates that LECO should not have too much problems paying its short term obligations.
LECO has a Current ratio of 1.68. This is in the lower half of the industry: LECO underperforms 63.85% of its industry peers.
A Quick Ratio of 1.08 indicates that LECO should not have too much problems paying its short term obligations.
The Quick ratio of LECO (1.08) is comparable to the rest of the industry.
The current and quick ratio evaluation for LECO is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.68 | ||
| Quick Ratio | 1.08 |
3. Growth
3.1 Past
LECO shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 0.53%.
Measured over the past years, LECO shows a quite strong growth in Earnings Per Share. The EPS has been growing by 14.62% on average per year.
Looking at the last year, LECO shows a small growth in Revenue. The Revenue has grown by 0.10% in the last year.
The Revenue has been growing slightly by 5.94% on average over the past years.
EPS 1Y (TTM)0.53%
EPS 3Y14.33%
EPS 5Y14.62%
EPS Q2Q%11.11%
Revenue 1Y (TTM)0.1%
Revenue growth 3Y7.42%
Revenue growth 5Y5.94%
Sales Q2Q%6.56%
3.2 Future
The Earnings Per Share is expected to grow by 9.03% on average over the next years. This is quite good.
LECO is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.56% yearly.
EPS Next Y5.87%
EPS Next 2Y7.99%
EPS Next 3Y7.61%
EPS Next 5Y9.03%
Revenue Next Year5.66%
Revenue Next 2Y5.65%
Revenue Next 3Y5.23%
Revenue Next 5Y5.56%
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 25.58, LECO can be considered very expensive at the moment.
The rest of the industry has a similar Price/Earnings ratio as LECO.
Compared to an average S&P500 Price/Earnings ratio of 27.67, LECO is valued at the same level.
LECO is valuated rather expensively with a Price/Forward Earnings ratio of 22.38.
LECO's Price/Forward Earnings is on the same level as the industry average.
LECO is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 23.33, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.58 | ||
| Fwd PE | 22.38 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of LECO is on the same level as its industry peers.
The rest of the industry has a similar Price/Free Cash Flow ratio as LECO.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 26.47 | ||
| EV/EBITDA | 17.35 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
LECO has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)4.36
PEG (5Y)1.75
EPS Next 2Y7.99%
EPS Next 3Y7.61%
5. Dividend
5.1 Amount
LECO has a Yearly Dividend Yield of 1.33%.
Compared to an average industry Dividend Yield of 1.80, LECO pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.35, LECO's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.33% |
5.2 History
On average, the dividend of LECO grows each year by 8.56%, which is quite nice.
LECO has been paying a dividend for at least 10 years, so it has a reliable track record.
LECO has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)8.56%
Div Incr Years24
Div Non Decr Years24
5.3 Sustainability
32.88% of the earnings are spent on dividend by LECO. This is a low number and sustainable payout ratio.
The dividend of LECO is growing around the same rate as the earnings are growing. If this keeps up the dividend growth is sustainable.
DP32.88%
EPS Next 2Y7.99%
EPS Next 3Y7.61%
242.21
+3.28 (+1.37%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners81.51%
Inst Owner Change-0.1%
Ins Owners1.48%
Ins Owner Change-0.68%
Market Cap13.37B
Revenue(TTM)4.10B
Net Income(TTM)502.87M
Analysts76.67
Price Target260.33 (7.48%)
Short Float %1.71%
Short Ratio2.86
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.33% |
Yearly Dividend2.87
Dividend Growth(5Y)8.56%
DP32.88%
Div Incr Years24
Div Non Decr Years24
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)2.55%
Min EPS beat(2)-5.1%
Max EPS beat(2)10.19%
EPS beat(4)3
Avg EPS beat(4)7.98%
Min EPS beat(4)-5.1%
Max EPS beat(4)25.75%
EPS beat(8)7
Avg EPS beat(8)5.97%
EPS beat(12)10
Avg EPS beat(12)4.56%
EPS beat(16)14
Avg EPS beat(16)5.47%
Revenue beat(2)2
Avg Revenue beat(2)1.67%
Min Revenue beat(2)0.82%
Max Revenue beat(2)2.51%
Revenue beat(4)3
Avg Revenue beat(4)0.23%
Min Revenue beat(4)-2.69%
Max Revenue beat(4)2.51%
Revenue beat(8)4
Avg Revenue beat(8)-1.28%
Revenue beat(12)5
Avg Revenue beat(12)-1.45%
Revenue beat(16)8
Avg Revenue beat(16)-0.82%
PT rev (1m)0%
PT rev (3m)18.08%
EPS NQ rev (1m)0%
EPS NQ rev (3m)8.37%
EPS NY rev (1m)-0.72%
EPS NY rev (3m)6.22%
Revenue NQ rev (1m)-0.09%
Revenue NQ rev (3m)4.28%
Revenue NY rev (1m)-0.02%
Revenue NY rev (3m)2.9%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.58 | ||
| Fwd PE | 22.38 | ||
| P/S | 3.26 | ||
| P/FCF | 26.47 | ||
| P/OCF | 21.4 | ||
| P/B | 9.69 | ||
| P/tB | 24.3 | ||
| EV/EBITDA | 17.35 |
EPS(TTM)9.47
EY3.91%
EPS(NY)10.82
Fwd EY4.47%
FCF(TTM)9.15
FCFY3.78%
OCF(TTM)11.32
OCFY4.67%
SpS74.27
BVpS25
TBVpS9.97
PEG (NY)4.36
PEG (5Y)1.75
Graham Number72.98
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 13.49% | ||
| ROE | 36.45% | ||
| ROCE | 26.67% | ||
| ROIC | 21.01% | ||
| ROICexc | 23.62% | ||
| ROICexgc | 36.04% | ||
| OM | 17.58% | ||
| PM (TTM) | 12.27% | ||
| GM | 36.51% | ||
| FCFM | 12.32% |
ROA(3y)14.74%
ROA(5y)12.76%
ROE(3y)40.81%
ROE(5y)36.11%
ROIC(3y)21.22%
ROIC(5y)19.81%
ROICexc(3y)24.29%
ROICexc(5y)22.63%
ROICexgc(3y)41.43%
ROICexgc(5y)36.86%
ROCE(3y)27.25%
ROCE(5y)25.47%
ROICexgc growth 3Y8.18%
ROICexgc growth 5Y9.37%
ROICexc growth 3Y1.83%
ROICexc growth 5Y4.58%
OM growth 3Y4.56%
OM growth 5Y5.34%
PM growth 3Y10.79%
PM growth 5Y3.57%
GM growth 3Y3.53%
GM growth 5Y1.97%
F-Score6
Asset Turnover1.1
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.84 | ||
| Debt/FCF | 2.49 | ||
| Debt/EBITDA | 1.42 | ||
| Cap/Depr | 127.19% | ||
| Cap/Sales | 2.92% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 76.65% | ||
| Profit Quality | 100.41% | ||
| Current Ratio | 1.68 | ||
| Quick Ratio | 1.08 | ||
| Altman-Z | 6.9 |
F-Score6
WACC9.25%
ROIC/WACC2.27
Cap/Depr(3y)109.73%
Cap/Depr(5y)95.96%
Cap/Sales(3y)2.33%
Cap/Sales(5y)2.23%
Profit Quality(3y)91.73%
Profit Quality(5y)105.28%
High Growth Momentum
Growth
EPS 1Y (TTM)0.53%
EPS 3Y14.33%
EPS 5Y14.62%
EPS Q2Q%11.11%
EPS Next Y5.87%
EPS Next 2Y7.99%
EPS Next 3Y7.61%
EPS Next 5Y9.03%
Revenue 1Y (TTM)0.1%
Revenue growth 3Y7.42%
Revenue growth 5Y5.94%
Sales Q2Q%6.56%
Revenue Next Year5.66%
Revenue Next 2Y5.65%
Revenue Next 3Y5.23%
Revenue Next 5Y5.56%
EBIT growth 1Y1.42%
EBIT growth 3Y12.31%
EBIT growth 5Y11.6%
EBIT Next Year22.32%
EBIT Next 3Y11.48%
EBIT Next 5Y10.21%
FCF growth 1Y3.68%
FCF growth 3Y16.82%
FCF growth 5Y7.65%
OCF growth 1Y10.55%
OCF growth 3Y17.94%
OCF growth 5Y8.24%