LINCOLN ELECTRIC HOLDINGS (LECO) Stock Fundamental Analysis
NASDAQ:LECO - Nasdaq - US5339001068 - Common Stock - Currency: USD
LECO gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 128 industry peers in the Machinery industry. LECO gets an excellent profitability rating and is at the same time showing great financial health properties. LECO has a decent growth rate and is not valued too expensively. Finally LECO also has an excellent dividend rating. These ratings could make LECO a good candidate for dividend investing.
1. Profitability
1.1 Basic Checks
LECO had positive earnings in the past year.
LECO had a positive operating cash flow in the past year.
Each year in the past 5 years LECO has been profitable.
In the past 5 years LECO always reported a positive cash flow from operatings.
1.2 Ratios
LECO's Return On Assets of 12.72% is amongst the best of the industry. LECO outperforms 88.28% of its industry peers.
The Return On Equity of LECO (34.41%) is better than 95.31% of its industry peers.
The Return On Invested Capital of LECO (20.27%) is better than 96.09% of its industry peers.
LECO had an Average Return On Invested Capital over the past 3 years of 21.22%. This is significantly above the industry average of 10.67%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 12.72% | ||
| ROE | 34.41% | ||
| ROIC | 20.27% |
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
The Profit Margin of LECO (11.44%) is better than 78.13% of its industry peers.
LECO's Profit Margin has improved in the last couple of years.
The Operating Margin of LECO (16.98%) is better than 79.69% of its industry peers.
LECO's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 36.58%, LECO is in the better half of the industry, outperforming 66.41% of the companies in the same industry.
LECO's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 16.98% | ||
| PM (TTM) | 11.44% | ||
| GM | 36.58% |
OM growth 3Y4.56%
OM growth 5Y5.34%
PM growth 3Y10.79%
PM growth 5Y3.57%
GM growth 3Y3.53%
GM growth 5Y1.97%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), LECO is creating value.
Compared to 1 year ago, LECO has less shares outstanding
LECO has less shares outstanding than it did 5 years ago.
Compared to 1 year ago, LECO has a worse debt to assets ratio.
2.2 Solvency
LECO has an Altman-Z score of 6.41. This indicates that LECO is financially healthy and has little risk of bankruptcy at the moment.
LECO's Altman-Z score of 6.41 is amongst the best of the industry. LECO outperforms 85.94% of its industry peers.
LECO has a debt to FCF ratio of 2.36. This is a good value and a sign of high solvency as LECO would need 2.36 years to pay back of all of its debts.
LECO has a better Debt to FCF ratio (2.36) than 71.88% of its industry peers.
A Debt/Equity ratio of 0.87 indicates that LECO is somewhat dependend on debt financing.
LECO has a worse Debt to Equity ratio (0.87) than 75.00% of its industry peers.
Even though the debt/equity ratio score it not favorable for LECO, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.87 | ||
| Debt/FCF | 2.36 | ||
| Altman-Z | 6.41 |
ROIC/WACC2.1
WACC9.66%
2.3 Liquidity
A Current Ratio of 1.78 indicates that LECO should not have too much problems paying its short term obligations.
LECO has a Current ratio of 1.78. This is in the lower half of the industry: LECO underperforms 63.28% of its industry peers.
LECO has a Quick Ratio of 1.19. This is a normal value and indicates that LECO is financially healthy and should not expect problems in meeting its short term obligations.
LECO has a Quick ratio (1.19) which is comparable to the rest of the 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 | 1.78 | ||
| Quick Ratio | 1.19 |
3. Growth
3.1 Past
The earnings per share for LECO have decreased by -3.26% in the last year.
The Earnings Per Share has been growing by 14.62% on average over the past years. This is quite good.
LECO shows a decrease in Revenue. In the last year, the revenue decreased by -2.46%.
LECO shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 5.94% yearly.
EPS 1Y (TTM)-3.26%
EPS 3Y14.33%
EPS 5Y14.62%
EPS Q2Q%-3.14%
Revenue 1Y (TTM)-2.46%
Revenue growth 3Y7.42%
Revenue growth 5Y5.94%
Sales Q2Q%2.36%
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 10.41% on average per year.
Based on estimates for the next years, LECO will show a small growth in Revenue. The Revenue will grow by 6.20% on average per year.
EPS Next Y-0.93%
EPS Next 2Y4.61%
EPS Next 3Y5.56%
EPS Next 5Y10.41%
Revenue Next Year2.07%
Revenue Next 2Y3.34%
Revenue Next 3Y3.64%
Revenue Next 5Y6.2%
3.3 Evolution
The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past 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
Based on the Price/Earnings ratio of 21.21, the valuation of LECO can be described as rather expensive.
LECO's Price/Earnings ratio is a bit cheaper when compared to the industry. LECO is cheaper than 60.16% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 26.43. LECO is around the same levels.
Based on the Price/Forward Earnings ratio of 19.24, the valuation of LECO can be described as rather expensive.
Compared to the rest of the industry, the Price/Forward Earnings ratio of LECO is on the same level as its industry peers.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.17, LECO is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.21 | ||
| Fwd PE | 19.24 |
4.2 Price Multiples
LECO's Enterprise Value to EBITDA is on the same level as the industry average.
64.06% of the companies in the same industry are more expensive than LECO, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 20.42 | ||
| EV/EBITDA | 15.12 |
4.3 Compensation for Growth
The excellent profitability rating of LECO may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)1.45
EPS Next 2Y4.61%
EPS Next 3Y5.56%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 1.54%, LECO has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 1.91, LECO pays a bit more dividend than its industry peers.
LECO's Dividend Yield is slightly below the S&P500 average, which is at 2.38.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.54% |
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 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
LECO pays out 35.53% of its income as dividend. This is a sustainable payout ratio.
LECO's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP35.53%
EPS Next 2Y4.61%
EPS Next 3Y5.56%
195.37
+0.8 (+0.41%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners79.93%
Inst Owner Change-0.91%
Ins Owners1.57%
Ins Owner Change1.95%
Market Cap10.91B
Analysts76.47
Price Target218.92 (12.05%)
Short Float %1.98%
Short Ratio3.01
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.54% |
Yearly Dividend2.87
Dividend Growth(5Y)8.56%
DP35.53%
Div Incr Years24
Div Non Decr Years24
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)10.33%
Min EPS beat(2)-5.1%
Max EPS beat(2)25.75%
EPS beat(4)3
Avg EPS beat(4)5.44%
Min EPS beat(4)-5.1%
Max EPS beat(4)25.75%
EPS beat(8)7
Avg EPS beat(8)5.11%
EPS beat(12)10
Avg EPS beat(12)4.4%
EPS beat(16)14
Avg EPS beat(16)5.5%
Revenue beat(2)2
Avg Revenue beat(2)0.56%
Min Revenue beat(2)0.3%
Max Revenue beat(2)0.82%
Revenue beat(4)2
Avg Revenue beat(4)-0.81%
Min Revenue beat(4)-2.69%
Max Revenue beat(4)0.82%
Revenue beat(8)3
Avg Revenue beat(8)-2.27%
Revenue beat(12)5
Avg Revenue beat(12)-1.56%
Revenue beat(16)8
Avg Revenue beat(16)-0.8%
PT rev (1m)-5.87%
PT rev (3m)-8.67%
EPS NQ rev (1m)-1.96%
EPS NQ rev (3m)-2.79%
EPS NY rev (1m)-2.63%
EPS NY rev (3m)-3.92%
Revenue NQ rev (1m)0.77%
Revenue NQ rev (3m)1.16%
Revenue NY rev (1m)0.97%
Revenue NY rev (3m)0%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.21 | ||
| Fwd PE | 19.24 | ||
| P/S | 2.71 | ||
| P/FCF | 20.42 | ||
| P/OCF | 16.75 | ||
| P/B | 8.14 | ||
| P/tB | 20.72 | ||
| EV/EBITDA | 15.12 |
EPS(TTM)9.21
EY4.71%
EPS(NY)10.16
Fwd EY5.2%
FCF(TTM)9.57
FCFY4.9%
OCF(TTM)11.67
OCFY5.97%
SpS72.22
BVpS24
TBVpS9.43
PEG (NY)N/A
PEG (5Y)1.45
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 12.72% | ||
| ROE | 34.41% | ||
| ROCE | 25.78% | ||
| ROIC | 20.27% | ||
| ROICexc | 23.8% | ||
| ROICexgc | 37.09% | ||
| OM | 16.98% | ||
| PM (TTM) | 11.44% | ||
| GM | 36.58% | ||
| FCFM | 13.25% |
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 Turnover1.11
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.87 | ||
| Debt/FCF | 2.36 | ||
| Debt/EBITDA | 1.5 | ||
| Cap/Depr | 129.7% | ||
| Cap/Sales | 2.91% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 84.05% | ||
| Profit Quality | 115.81% | ||
| Current Ratio | 1.78 | ||
| Quick Ratio | 1.19 | ||
| Altman-Z | 6.41 |
F-Score6
WACC9.66%
ROIC/WACC2.1
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)-3.26%
EPS 3Y14.33%
EPS 5Y14.62%
EPS Q2Q%-3.14%
EPS Next Y-0.93%
EPS Next 2Y4.61%
EPS Next 3Y5.56%
EPS Next 5Y10.41%
Revenue 1Y (TTM)-2.46%
Revenue growth 3Y7.42%
Revenue growth 5Y5.94%
Sales Q2Q%2.36%
Revenue Next Year2.07%
Revenue Next 2Y3.34%
Revenue Next 3Y3.64%
Revenue Next 5Y6.2%
EBIT growth 1Y-5.84%
EBIT growth 3Y12.31%
EBIT growth 5Y11.6%
EBIT Next Year16.2%
EBIT Next 3Y9.48%
EBIT Next 5Y11.15%
FCF growth 1Y36.18%
FCF growth 3Y16.82%
FCF growth 5Y7.65%
OCF growth 1Y40.32%
OCF growth 3Y17.94%
OCF growth 5Y8.24%