LINCOLN ELECTRIC HOLDINGS (LECO) Stock Fundamental Analysis
NASDAQ:LECO - Nasdaq - US5339001068 - Common Stock - Currency: USD
Overall LECO gets a fundamental rating of 7 out of 10. We evaluated LECO against 129 industry peers in the Machinery industry. Both the health and profitability get an excellent rating, making LECO a very profitable company, without any liquidiy or solvency issues. LECO has a valuation in line with the averages, but on the other hand it scores bad on growth.
1. Profitability
1.1 Basic Checks
LECO had positive earnings in the past year.
In the past year LECO had a positive cash flow from operations.
In the past 5 years LECO has always been profitable.
Each year in the past 5 years LECO had a positive operating cash flow.
1.2 Ratios
Looking at the Return On Assets, with a value of 13.17%, LECO belongs to the top of the industry, outperforming 90.48% of the companies in the same industry.
The Return On Equity of LECO (36.03%) is better than 94.44% of its industry peers.
LECO has a Return On Invested Capital of 19.91%. This is amongst the best in the industry. LECO outperforms 96.03% of its industry peers.
The Average Return On Invested Capital over the past 3 years for LECO is significantly above the industry average of 11.07%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 13.17% | ||
| ROE | 36.03% | ||
| ROIC | 19.91% |
ROA(3y)13.89%
ROA(5y)12.58%
ROE(3y)39.77%
ROE(5y)36.25%
ROIC(3y)21.33%
ROIC(5y)19.26%
1.3 Margins
With an excellent Profit Margin value of 11.93%, LECO belongs to the best of the industry, outperforming 80.95% of the companies in the same industry.
In the last couple of years the Profit Margin of LECO has grown nicely.
The Operating Margin of LECO (17.49%) is better than 82.54% of its industry peers.
LECO's Operating Margin has improved in the last couple of years.
LECO's Gross Margin of 36.56% is fine compared to the rest of the industry. LECO outperforms 65.08% of its industry peers.
LECO's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 17.49% | ||
| PM (TTM) | 11.93% | ||
| GM | 36.56% |
OM growth 3Y11.59%
OM growth 5Y5.2%
PM growth 3Y18.78%
PM growth 5Y6.53%
GM growth 3Y2.39%
GM growth 5Y0.75%
2. Health
2.1 Basic Checks
LECO has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
The number of shares outstanding for LECO has been reduced compared to 1 year ago.
The number of shares outstanding for LECO has been reduced compared to 5 years ago.
LECO has a better debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 6.31 indicates that LECO is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 6.31, LECO belongs to the top of the industry, outperforming 83.33% of the companies in the same industry.
LECO has a debt to FCF ratio of 2.45. This is a good value and a sign of high solvency as LECO would need 2.45 years to pay back of all of its debts.
LECO's Debt to FCF ratio of 2.45 is fine compared to the rest of the industry. LECO outperforms 74.60% of its industry peers.
A Debt/Equity ratio of 0.94 indicates that LECO is somewhat dependend on debt financing.
The Debt to Equity ratio of LECO (0.94) is worse than 80.95% 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 | 0.94 | ||
| Debt/FCF | 2.45 | ||
| Altman-Z | 6.31 |
ROIC/WACC2.08
WACC9.59%
2.3 Liquidity
A Current Ratio of 1.85 indicates that LECO should not have too much problems paying its short term obligations.
LECO's Current ratio of 1.85 is on the low side compared to the rest of the industry. LECO is outperformed by 63.49% of its industry peers.
A Quick Ratio of 1.20 indicates that LECO should not have too much problems paying its short term obligations.
LECO has a Quick ratio of 1.20. This is comparable to the rest of the industry: LECO outperforms 46.83% of its industry peers.
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 | 1.85 | ||
| Quick Ratio | 1.2 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 2.81% over the past year.
Measured over the past years, LECO shows a quite strong growth in Earnings Per Share. The EPS has been growing by 14.34% on average per year.
Looking at the last year, LECO shows a decrease in Revenue. The Revenue has decreased by -0.46% in the last year.
The Revenue has been growing slightly by 6.71% on average over the past years.
EPS 1Y (TTM)2.81%
EPS 3Y31.53%
EPS 5Y14.34%
EPS Q2Q%-10.83%
Revenue 1Y (TTM)-0.46%
Revenue growth 3Y16.44%
Revenue growth 5Y6.71%
Sales Q2Q%-4.79%
3.2 Future
Based on estimates for the next years, LECO will show a small growth in Earnings Per Share. The EPS will grow by 5.69% on average per year.
Based on estimates for the next years, LECO will show a small growth in Revenue. The Revenue will grow by 2.90% on average per year.
EPS Next Y-5.59%
EPS Next 2Y-0.15%
EPS Next 3Y3.05%
EPS Next 5Y5.69%
Revenue Next Year-4.31%
Revenue Next 2Y-0.59%
Revenue Next 3Y1.26%
Revenue Next 5Y2.9%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
LECO is valuated rather expensively with a Price/Earnings ratio of 21.11.
Compared to the rest of the industry, the Price/Earnings ratio of LECO indicates a somewhat cheap valuation: LECO is cheaper than 62.70% of the companies listed in the same industry.
LECO is valuated rather cheaply when we compare the Price/Earnings ratio to 28.47, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 20.59, which indicates a rather expensive current valuation of LECO.
LECO's Price/Forward Earnings is on the same level as the industry average.
LECO is valuated cheaply when we compare the Price/Forward Earnings ratio to 92.74, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.11 | ||
| Fwd PE | 20.59 |
4.2 Price Multiples
LECO's Enterprise Value to EBITDA ratio is in line with the industry average.
Based on the Price/Free Cash Flow ratio, LECO is valued a bit cheaper than 71.43% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 21.18 | ||
| EV/EBITDA | 14.67 |
4.3 Compensation for Growth
The excellent profitability rating of LECO may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)1.47
EPS Next 2Y-0.15%
EPS Next 3Y3.05%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 1.50%, LECO has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 1.61, LECO pays a bit more dividend than its industry peers.
Compared to the average S&P500 Dividend Yield of 2.28, LECO is paying slightly less dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.5% |
5.2 History
On average, the dividend of LECO grows each year by 10.33%, which is quite nice.
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)10.33%
Div Incr Years24
Div Non Decr Years24
5.3 Sustainability
LECO pays out 32.89% of its income as dividend. This is a sustainable payout ratio.
LECO's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP32.89%
EPS Next 2Y-0.15%
EPS Next 3Y3.05%
LINCOLN ELECTRIC HOLDINGS
NASDAQ:LECO (2/4/2025, 8:00:02 PM)
Premarket: 193.88 +0.5 (+0.26%)193.38
+0.92 (+0.48%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners80.54%
Inst Owner Change-0.26%
Ins Owners1.55%
Ins Owner Change0.3%
Market Cap10.91B
Analysts74.44
Price Target230.78 (19.34%)
Short Float %1.7%
Short Ratio3.36
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.5% |
Yearly Dividend2.58
Dividend Growth(5Y)10.33%
DP32.89%
Div Incr Years24
Div Non Decr Years24
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)0.56%
Min EPS beat(2)0.04%
Max EPS beat(2)1.08%
EPS beat(4)4
Avg EPS beat(4)3.09%
Min EPS beat(4)0.04%
Max EPS beat(4)10.32%
EPS beat(8)7
Avg EPS beat(8)2.68%
EPS beat(12)11
Avg EPS beat(12)4.7%
EPS beat(16)15
Avg EPS beat(16)5.83%
Revenue beat(2)0
Avg Revenue beat(2)-2.18%
Min Revenue beat(2)-2.69%
Max Revenue beat(2)-1.67%
Revenue beat(4)1
Avg Revenue beat(4)-2.87%
Min Revenue beat(4)-7.43%
Max Revenue beat(4)0.33%
Revenue beat(8)1
Avg Revenue beat(8)-2.71%
Revenue beat(12)5
Avg Revenue beat(12)-1.24%
Revenue beat(16)7
Avg Revenue beat(16)-0.8%
PT rev (1m)-0.66%
PT rev (3m)4.37%
EPS NQ rev (1m)-0.66%
EPS NQ rev (3m)-12.99%
EPS NY rev (1m)-0.2%
EPS NY rev (3m)-1.03%
Revenue NQ rev (1m)-0.2%
Revenue NQ rev (3m)-4.93%
Revenue NY rev (1m)-0.07%
Revenue NY rev (3m)-0.68%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.11 | ||
| Fwd PE | 20.59 | ||
| P/S | 2.7 | ||
| P/FCF | 21.18 | ||
| P/OCF | 17.46 | ||
| P/B | 8.15 | ||
| P/tB | 20.97 | ||
| EV/EBITDA | 14.67 |
EPS(TTM)9.16
EY4.74%
EPS(NY)9.39
Fwd EY4.86%
FCF(TTM)9.13
FCFY4.72%
OCF(TTM)11.07
OCFY5.73%
SpS71.68
BVpS23.73
TBVpS9.22
PEG (NY)N/A
PEG (5Y)1.47
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 13.17% | ||
| ROE | 36.03% | ||
| ROCE | 26.08% | ||
| ROIC | 19.91% | ||
| ROICexc | 23.24% | ||
| ROICexgc | 35.12% | ||
| OM | 17.49% | ||
| PM (TTM) | 11.93% | ||
| GM | 36.56% | ||
| FCFM | 12.74% |
ROA(3y)13.89%
ROA(5y)12.58%
ROE(3y)39.77%
ROE(5y)36.25%
ROIC(3y)21.33%
ROIC(5y)19.26%
ROICexc(3y)24.05%
ROICexc(5y)21.83%
ROICexgc(3y)38.67%
ROICexgc(5y)33.96%
ROCE(3y)27.38%
ROCE(5y)24.66%
ROICexcg growth 3Y19.11%
ROICexcg growth 5Y6.21%
ROICexc growth 3Y14.08%
ROICexc growth 5Y3.03%
OM growth 3Y11.59%
OM growth 5Y5.2%
PM growth 3Y18.78%
PM growth 5Y6.53%
GM growth 3Y2.39%
GM growth 5Y0.75%
F-Score6
Asset Turnover1.1
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.94 | ||
| Debt/FCF | 2.45 | ||
| Debt/EBITDA | 1.59 | ||
| Cap/Depr | 125.89% | ||
| Cap/Sales | 2.71% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 78.63% | ||
| Profit Quality | 106.78% | ||
| Current Ratio | 1.85 | ||
| Quick Ratio | 1.2 | ||
| Altman-Z | 6.31 |
F-Score6
WACC9.59%
ROIC/WACC2.08
Cap/Depr(3y)91.37%
Cap/Depr(5y)86.61%
Cap/Sales(3y)2%
Cap/Sales(5y)2.11%
Profit Quality(3y)93.72%
Profit Quality(5y)107.35%
High Growth Momentum
Growth
EPS 1Y (TTM)2.81%
EPS 3Y31.53%
EPS 5Y14.34%
EPS Q2Q%-10.83%
EPS Next Y-5.59%
EPS Next 2Y-0.15%
EPS Next 3Y3.05%
EPS Next 5Y5.69%
Revenue 1Y (TTM)-0.46%
Revenue growth 3Y16.44%
Revenue growth 5Y6.71%
Sales Q2Q%-4.79%
Revenue Next Year-4.31%
Revenue Next 2Y-0.59%
Revenue Next 3Y1.26%
Revenue Next 5Y2.9%
EBIT growth 1Y2.07%
EBIT growth 3Y29.93%
EBIT growth 5Y12.26%
EBIT Next Year7.39%
EBIT Next 3Y7.18%
EBIT Next 5Y7.1%
FCF growth 1Y64.5%
FCF growth 3Y25.43%
FCF growth 5Y17.45%
OCF growth 1Y63.74%
OCF growth 3Y23.85%
OCF growth 5Y15.19%