LINCOLN ELECTRIC HOLDINGS (LECO) Stock Fundamental Analysis
USA - NASDAQ:LECO - US5339001068 - Common Stock
233.98 USD
-2.42 (-1.02%)
233.98 USD
0 (0%)
Taking everything into account, LECO scores 6 out of 10 in our fundamental rating. LECO was compared to 128 industry peers in the Machinery industry. LECO has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. While showing a medium growth rate, LECO is valued expensive at the moment.
1. Profitability
1.1 Basic Checks
In the past year LECO was profitable.
LECO had a positive operating cash flow in the past year.
LECO had positive earnings in each of the past 5 years.
Each year in the past 5 years LECO had a positive operating cash flow.
1.2 Ratios
LECO has a Return On Assets of 13.49%. This is amongst the best in the industry. LECO outperforms 91.41% of its industry peers.
The Return On Equity of LECO (36.45%) is better than 96.09% of its industry peers.
The Return On Invested Capital of LECO (21.01%) is better than 97.66% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for LECO is significantly above the industry average of 10.02%.
| 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 has a better Profit Margin (12.27%) than 82.81% of its industry peers.
In the last couple of years the Profit Margin of LECO has grown nicely.
LECO's Operating Margin of 17.58% is amongst the best of the industry. LECO outperforms 82.03% of its industry peers.
In the last couple of years the Operating Margin of LECO has grown nicely.
With a decent Gross Margin value of 36.51%, LECO is doing good in the industry, outperforming 66.41% of the companies in the same industry.
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
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so LECO is creating value.
Compared to 1 year ago, LECO has less shares outstanding
Compared to 5 years ago, LECO has less shares outstanding
Compared to 1 year ago, LECO has a worse debt to assets ratio.
2.2 Solvency
An Altman-Z score of 6.83 indicates that LECO is not in any danger for bankruptcy at the moment.
LECO's Altman-Z score of 6.83 is amongst the best of the industry. LECO outperforms 88.28% 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.
With a decent Debt to FCF ratio value of 2.49, LECO is doing good in the industry, outperforming 71.88% of the companies in the same industry.
LECO has a Debt/Equity ratio of 0.84. This is a neutral value indicating LECO is somewhat dependend on debt financing.
LECO has a Debt to Equity ratio of 0.84. This is in the lower half of the industry: LECO underperforms 73.44% 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 | 6.83 |
ROIC/WACC2.15
WACC9.77%
2.3 Liquidity
LECO has a Current Ratio of 1.68. This is a normal value and indicates that LECO is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 1.68, LECO is doing worse than 62.50% of the companies in the same industry.
A Quick Ratio of 1.08 indicates that LECO should not have too much problems paying its short term obligations.
Looking at the Quick ratio, with a value of 1.08, LECO is in line with its industry, outperforming 41.41% of the companies in the same industry.
LECO does not score too well on the current and quick ratio evaluation. However, as it has 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.
LECO shows a small growth in Revenue. In the last year, the Revenue has grown by 0.10%.
LECO shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 5.94% yearly.
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
Based on estimates for the next years, LECO will show a quite strong growth in Earnings Per Share. The EPS will grow by 9.03% on average per year.
The Revenue is expected to grow by 5.56% on average over the next years.
EPS Next Y6.63%
EPS Next 2Y8.51%
EPS Next 3Y8.16%
EPS Next 5Y9.03%
Revenue Next Year5.69%
Revenue Next 2Y5.64%
Revenue Next 3Y4.96%
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.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 24.71, the valuation of LECO can be described as rather expensive.
Compared to the rest of the industry, the Price/Earnings ratio of LECO is on the same level as its industry peers.
Compared to an average S&P500 Price/Earnings ratio of 27.20, LECO is valued at the same level.
A Price/Forward Earnings ratio of 21.41 indicates a rather expensive valuation of LECO.
Compared to the rest of the industry, the Price/Forward Earnings ratio of LECO is on the same level as its industry peers.
LECO's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 22.71.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 24.71 | ||
| Fwd PE | 21.41 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as LECO.
LECO's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 25.58 | ||
| EV/EBITDA | 17.02 |
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)3.72
PEG (5Y)1.69
EPS Next 2Y8.51%
EPS Next 3Y8.16%
5. Dividend
5.1 Amount
LECO has a Yearly Dividend Yield of 1.24%.
Compared to an average industry Dividend Yield of 1.74, LECO pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.38, LECO's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.24% |
5.2 History
The dividend of LECO is nicely growing with an annual growth rate of 8.56%!
LECO has paid a dividend for at least 10 years, which is a reliable track record.
LECO has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
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.
LECO's earnings are growing around the same pace than its dividend. As long as the earnings growth is kept the dividend growth is sustainable.
DP32.88%
EPS Next 2Y8.51%
EPS Next 3Y8.16%
233.98
-2.42 (-1.02%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners80.45%
Inst Owner Change-0.01%
Ins Owners1.47%
Ins Owner Change-0.6%
Market Cap12.91B
Analysts76.47
Price Target260.33 (11.26%)
Short Float %1.56%
Short Ratio2.67
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.24% |
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)4.92%
PT rev (3m)20.32%
EPS NQ rev (1m)0.12%
EPS NQ rev (3m)9.6%
EPS NY rev (1m)6.99%
EPS NY rev (3m)7.64%
Revenue NQ rev (1m)-0.92%
Revenue NQ rev (3m)5.4%
Revenue NY rev (1m)2.92%
Revenue NY rev (3m)3.4%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 24.71 | ||
| Fwd PE | 21.41 | ||
| P/S | 3.15 | ||
| P/FCF | 25.58 | ||
| P/OCF | 20.68 | ||
| P/B | 9.36 | ||
| P/tB | 23.47 | ||
| EV/EBITDA | 17.02 |
EPS(TTM)9.47
EY4.05%
EPS(NY)10.93
Fwd EY4.67%
FCF(TTM)9.15
FCFY3.91%
OCF(TTM)11.32
OCFY4.84%
SpS74.27
BVpS25
TBVpS9.97
PEG (NY)3.72
PEG (5Y)1.69
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%
ROICexcg growth 3Y8.18%
ROICexcg 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 | 6.83 |
F-Score6
WACC9.77%
ROIC/WACC2.15
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 Y6.63%
EPS Next 2Y8.51%
EPS Next 3Y8.16%
EPS Next 5Y9.03%
Revenue 1Y (TTM)0.1%
Revenue growth 3Y7.42%
Revenue growth 5Y5.94%
Sales Q2Q%6.56%
Revenue Next Year5.69%
Revenue Next 2Y5.64%
Revenue Next 3Y4.96%
Revenue Next 5Y5.56%
EBIT growth 1Y1.42%
EBIT growth 3Y12.31%
EBIT growth 5Y11.6%
EBIT Next Year21.94%
EBIT Next 3Y11.35%
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%