ESAB CORP (ESAB) Stock Fundamental Analysis
NYSE:ESAB - New York Stock Exchange, Inc. - US29605J1060 - Common Stock - Currency: USD
We assign a fundamental rating of 5 out of 10 to ESAB. ESAB was compared to 128 industry peers in the Machinery industry. ESAB scores excellent on profitability, but there are some minor concerns on its financial health. ESAB is quite expensive at the moment. It does show a decent growth rate.
1. Profitability
1.1 Basic Checks
In the past year ESAB was profitable.
ESAB had a positive operating cash flow in the past year.
In the past 5 years ESAB has always been profitable.
Each year in the past 5 years ESAB had a positive operating cash flow.
1.2 Ratios
Looking at the Return On Assets, with a value of 6.42%, ESAB is in the better half of the industry, outperforming 62.50% of the companies in the same industry.
The Return On Equity of ESAB (14.17%) is better than 67.97% of its industry peers.
ESAB's Return On Invested Capital of 9.66% is fine compared to the rest of the industry. ESAB outperforms 66.41% of its industry peers.
ESAB had an Average Return On Invested Capital over the past 3 years of 9.72%. This is in line with the industry average of 10.71%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.42% | ||
| ROE | 14.17% | ||
| ROIC | 9.66% |
ROA(3y)5.92%
ROA(5y)5.84%
ROE(3y)14.67%
ROE(5y)11.97%
ROIC(3y)9.72%
ROIC(5y)8.68%
1.3 Margins
ESAB has a better Profit Margin (9.92%) than 68.75% of its industry peers.
ESAB's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 16.83%, ESAB is in the better half of the industry, outperforming 78.13% of the companies in the same industry.
In the last couple of years the Operating Margin of ESAB has grown nicely.
The Gross Margin of ESAB (38.02%) is better than 69.53% of its industry peers.
ESAB's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 16.83% | ||
| PM (TTM) | 9.92% | ||
| GM | 38.02% |
OM growth 3Y7.94%
OM growth 5Y6.5%
PM growth 3Y-0.24%
PM growth 5Y4.55%
GM growth 3Y3.13%
GM growth 5Y1.32%
2. Health
2.1 Basic Checks
ESAB has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
The number of shares outstanding for ESAB has been increased compared to 1 year ago.
ESAB has a worse debt/assets ratio than last year.
2.2 Solvency
ESAB has an Altman-Z score of 3.23. This indicates that ESAB is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of ESAB (3.23) is comparable to the rest of the industry.
The Debt to FCF ratio of ESAB is 3.64, which is a good value as it means it would take ESAB, 3.64 years of fcf income to pay off all of its debts.
ESAB has a better Debt to FCF ratio (3.64) than 61.72% of its industry peers.
ESAB has a Debt/Equity ratio of 0.55. This is a neutral value indicating ESAB is somewhat dependend on debt financing.
ESAB has a Debt to Equity ratio of 0.55. This is comparable to the rest of the industry: ESAB outperforms 41.41% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.55 | ||
| Debt/FCF | 3.64 | ||
| Altman-Z | 3.23 |
ROIC/WACC1.02
WACC9.48%
2.3 Liquidity
A Current Ratio of 1.91 indicates that ESAB should not have too much problems paying its short term obligations.
ESAB has a Current ratio of 1.91. This is comparable to the rest of the industry: ESAB outperforms 45.31% of its industry peers.
A Quick Ratio of 1.24 indicates that ESAB should not have too much problems paying its short term obligations.
With a Quick ratio value of 1.24, ESAB perfoms like the industry average, outperforming 50.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.91 | ||
| Quick Ratio | 1.24 |
3. Growth
3.1 Past
ESAB shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 8.67%, which is quite good.
ESAB shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 8.40% yearly.
The Revenue has decreased by -1.22% in the past year.
The Revenue has been growing slightly by 4.05% on average over the past years.
EPS 1Y (TTM)8.67%
EPS 3Y3.21%
EPS 5Y8.4%
EPS Q2Q%3.03%
Revenue 1Y (TTM)-1.22%
Revenue growth 3Y4.12%
Revenue growth 5Y4.05%
Sales Q2Q%-4.04%
3.2 Future
ESAB is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 10.05% yearly.
The Revenue is expected to grow by 2.85% on average over the next years.
EPS Next Y5.32%
EPS Next 2Y8.71%
EPS Next 3Y8.88%
EPS Next 5Y10.05%
Revenue Next Year2.21%
Revenue Next 2Y3.97%
Revenue Next 3Y3.55%
Revenue Next 5Y2.85%
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 stable.
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
The Price/Earnings ratio is 21.62, which indicates a rather expensive current valuation of ESAB.
The rest of the industry has a similar Price/Earnings ratio as ESAB.
ESAB's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 26.48.
Based on the Price/Forward Earnings ratio of 18.62, the valuation of ESAB can be described as rather expensive.
ESAB's Price/Forward Earnings ratio is in line with the industry average.
The average S&P500 Price/Forward Earnings ratio is at 34.04. ESAB is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.62 | ||
| Fwd PE | 18.62 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of ESAB is on the same level as its industry peers.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of ESAB is on the same level as its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 22.86 | ||
| EV/EBITDA | 14.8 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates ESAB does not grow enough to justify the current Price/Earnings ratio.
The decent profitability rating of ESAB may justify a higher PE ratio.
PEG (NY)4.07
PEG (5Y)2.57
EPS Next 2Y8.71%
EPS Next 3Y8.88%
5. Dividend
5.1 Amount
ESAB has a yearly dividend return of 0.35%, which is pretty low.
ESAB's Dividend Yield is comparable with the industry average which is at 1.91.
Compared to an average S&P500 Dividend Yield of 2.39, ESAB's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.35% |
5.2 History
ESAB has been paying a dividend for less than 5 years, so it still needs to build a track record.
Dividend Growth(5Y)N/A
Div Incr Years2
Div Non Decr Years2
5.3 Sustainability
ESAB pays out 6.73% of its income as dividend. This is a sustainable payout ratio.
DP6.73%
EPS Next 2Y8.71%
EPS Next 3Y8.88%
111.13
-4.73 (-4.08%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners98.65%
Inst Owner Change-0.17%
Ins Owners6.42%
Ins Owner Change36.84%
Market Cap6.74B
Analysts82.67
Price Target140.89 (26.78%)
Short Float %1.86%
Short Ratio3.94
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.35% |
Yearly Dividend0.28
Dividend Growth(5Y)N/A
DP6.73%
Div Incr Years2
Div Non Decr Years2
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)5.01%
Min EPS beat(2)2.31%
Max EPS beat(2)7.72%
EPS beat(4)4
Avg EPS beat(4)5.33%
Min EPS beat(4)2.1%
Max EPS beat(4)9.18%
EPS beat(8)8
Avg EPS beat(8)7.8%
EPS beat(12)12
Avg EPS beat(12)8.17%
EPS beat(16)N/A
Avg EPS beat(16)N/A
Revenue beat(2)2
Avg Revenue beat(2)2.04%
Min Revenue beat(2)1.4%
Max Revenue beat(2)2.68%
Revenue beat(4)2
Avg Revenue beat(4)0.86%
Min Revenue beat(4)-0.51%
Max Revenue beat(4)2.68%
Revenue beat(8)6
Avg Revenue beat(8)2.73%
Revenue beat(12)10
Avg Revenue beat(12)3.74%
Revenue beat(16)N/A
Avg Revenue beat(16)N/A
PT rev (1m)0.55%
PT rev (3m)1.85%
EPS NQ rev (1m)1.17%
EPS NQ rev (3m)-1.22%
EPS NY rev (1m)0.39%
EPS NY rev (3m)0.31%
Revenue NQ rev (1m)0.38%
Revenue NQ rev (3m)1.95%
Revenue NY rev (1m)0.78%
Revenue NY rev (3m)2.02%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.62 | ||
| Fwd PE | 18.62 | ||
| P/S | 2.47 | ||
| P/FCF | 22.86 | ||
| P/OCF | 19.45 | ||
| P/B | 3.53 | ||
| P/tB | N/A | ||
| EV/EBITDA | 14.8 |
EPS(TTM)5.14
EY4.63%
EPS(NY)5.97
Fwd EY5.37%
FCF(TTM)4.86
FCFY4.37%
OCF(TTM)5.71
OCFY5.14%
SpS45.02
BVpS31.5
TBVpS-4.59
PEG (NY)4.07
PEG (5Y)2.57
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.42% | ||
| ROE | 14.17% | ||
| ROCE | 12.96% | ||
| ROIC | 9.66% | ||
| ROICexc | 10.53% | ||
| ROICexgc | 32.12% | ||
| OM | 16.83% | ||
| PM (TTM) | 9.92% | ||
| GM | 38.02% | ||
| FCFM | 10.8% |
ROA(3y)5.92%
ROA(5y)5.84%
ROE(3y)14.67%
ROE(5y)11.97%
ROIC(3y)9.72%
ROIC(5y)8.68%
ROICexc(3y)10.17%
ROICexc(5y)8.99%
ROICexgc(3y)31.04%
ROICexgc(5y)29.46%
ROCE(3y)13.04%
ROCE(5y)11.64%
ROICexcg growth 3Y2.55%
ROICexcg growth 5YN/A
ROICexc growth 3Y8.34%
ROICexc growth 5YN/A
OM growth 3Y7.94%
OM growth 5Y6.5%
PM growth 3Y-0.24%
PM growth 5Y4.55%
GM growth 3Y3.13%
GM growth 5Y1.32%
F-Score7
Asset Turnover0.65
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.55 | ||
| Debt/FCF | 3.64 | ||
| Debt/EBITDA | 2 | ||
| Cap/Depr | 76.09% | ||
| Cap/Sales | 1.89% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 65.68% | ||
| Profit Quality | 108.89% | ||
| Current Ratio | 1.91 | ||
| Quick Ratio | 1.24 | ||
| Altman-Z | 3.23 |
F-Score7
WACC9.48%
ROIC/WACC1.02
Cap/Depr(3y)67.55%
Cap/Depr(5y)60.38%
Cap/Sales(3y)1.73%
Cap/Sales(5y)1.74%
Profit Quality(3y)110.75%
Profit Quality(5y)118.94%
High Growth Momentum
Growth
EPS 1Y (TTM)8.67%
EPS 3Y3.21%
EPS 5Y8.4%
EPS Q2Q%3.03%
EPS Next Y5.32%
EPS Next 2Y8.71%
EPS Next 3Y8.88%
EPS Next 5Y10.05%
Revenue 1Y (TTM)-1.22%
Revenue growth 3Y4.12%
Revenue growth 5Y4.05%
Sales Q2Q%-4.04%
Revenue Next Year2.21%
Revenue Next 2Y3.97%
Revenue Next 3Y3.55%
Revenue Next 5Y2.85%
EBIT growth 1Y4.26%
EBIT growth 3Y12.39%
EBIT growth 5Y10.82%
EBIT Next Year13.38%
EBIT Next 3Y9.91%
EBIT Next 5Y9.37%
FCF growth 1Y51.59%
FCF growth 3Y12.18%
FCF growth 5Y8.14%
OCF growth 1Y46.51%
OCF growth 3Y12.34%
OCF growth 5Y7.31%