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 has an excellent profitability rating, but there are some minor concerns on its financial health. While showing a medium growth rate, LECO is valued expensive at the moment. 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.
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
The Return On Assets of LECO (13.24%) is better than 91.41% of its industry peers.
LECO's Return On Equity of 35.11% is amongst the best of the industry. LECO outperforms 94.53% of its industry peers.
The Return On Invested Capital of LECO (20.63%) is better than 95.31% 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 10.70%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 13.24% | ||
| ROE | 35.11% | ||
| ROIC | 20.63% |
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 11.63% is fine compared to the rest of the industry. LECO outperforms 79.69% of its industry peers.
In the last couple of years the Profit Margin of LECO has grown nicely.
Looking at the Operating Margin, with a value of 17.29%, LECO belongs to the top of the industry, outperforming 82.03% of the companies in the same industry.
LECO's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 36.87%, LECO is in the better half of 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 | 17.29% | ||
| PM (TTM) | 11.63% | ||
| GM | 36.87% |
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
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 worse debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 6.34 indicates that LECO is not in any danger for bankruptcy at the moment.
With an excellent Altman-Z score value of 6.34, LECO belongs to the best of the industry, outperforming 85.94% of the companies in the same industry.
LECO has a debt to FCF ratio of 2.61. This is a good value and a sign of high solvency as LECO would need 2.61 years to pay back of all of its debts.
LECO has a Debt to FCF ratio of 2.61. This is in the better half of the industry: LECO outperforms 68.75% of its industry peers.
A Debt/Equity ratio of 0.87 indicates that LECO is somewhat dependend on debt financing.
LECO has a Debt to Equity ratio of 0.87. This is in the lower half of the industry: LECO underperforms 75.78% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.87 | ||
| Debt/FCF | 2.61 | ||
| Altman-Z | 6.34 |
ROIC/WACC2.12
WACC9.71%
2.3 Liquidity
LECO has a Current Ratio of 1.87. 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 Current ratio of 1.87. This is in the lower half of the industry: LECO underperforms 61.72% of its industry peers.
LECO has a Quick Ratio of 1.25. This is a normal value and indicates that LECO is financially healthy and should not expect problems in meeting its short term obligations.
The Quick ratio of LECO (1.25) is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.87 | ||
| Quick Ratio | 1.25 |
3. Growth
3.1 Past
The earnings per share for LECO have decreased by -3.26% in the last year.
LECO shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 14.62% yearly.
Looking at the last year, LECO shows a decrease in Revenue. The Revenue has decreased by -4.37% in the last year.
Measured over the past years, LECO shows a small growth in Revenue. The Revenue has been growing by 5.94% on average per year.
EPS 1Y (TTM)-3.26%
EPS 3Y14.33%
EPS 5Y14.62%
EPS Q2Q%-3.14%
Revenue 1Y (TTM)-4.37%
Revenue growth 3Y7.42%
Revenue growth 5Y5.94%
Sales Q2Q%2.36%
3.2 Future
The Earnings Per Share is expected to grow by 10.41% on average over the next years. This is quite good.
The Revenue is expected to grow by 6.20% on average over the next years.
EPS Next Y1.75%
EPS Next 2Y5.28%
EPS Next 3Y5.39%
EPS Next 5Y10.41%
Revenue Next Year1.08%
Revenue Next 2Y3.05%
Revenue Next 3Y3.29%
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 19.48, the valuation of LECO can be described as rather expensive.
The rest of the industry has a similar Price/Earnings ratio as LECO.
Compared to an average S&P500 Price/Earnings ratio of 28.88, LECO is valued a bit cheaper.
With a Price/Forward Earnings ratio of 17.45, LECO is valued on the expensive side.
Compared to the rest of the industry, the Price/Forward Earnings ratio of LECO indicates a somewhat cheap valuation: LECO is cheaper than 61.72% of the companies listed in the same industry.
LECO is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 21.20, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 19.48 | ||
| Fwd PE | 17.45 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as LECO.
The rest of the industry has a similar Price/Free Cash Flow ratio as LECO.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 20.84 | ||
| EV/EBITDA | 13.75 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The excellent profitability rating of LECO may justify a higher PE ratio.
PEG (NY)11.16
PEG (5Y)1.33
EPS Next 2Y5.28%
EPS Next 3Y5.39%
5. Dividend
5.1 Amount
LECO has a Yearly Dividend Yield of 1.63%.
Compared to an average industry Dividend Yield of 2.04, LECO pays a bit more dividend than its industry peers.
LECO's Dividend Yield is slightly below the S&P500 average, which is at 2.45.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.63% |
5.2 History
The dividend of LECO is nicely growing with an annual growth rate of 8.56%!
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
34.79% of the earnings are spent on dividend by LECO. This is a low number and sustainable payout ratio.
LECO's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP34.79%
EPS Next 2Y5.28%
EPS Next 3Y5.39%
NASDAQ:LECO (5/1/2025, 10:48:23 AM)
179.43
+3.23 (+1.83%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners79.93%
Inst Owner Change0.91%
Ins Owners1.57%
Ins Owner Change2.04%
Market Cap10.05B
Analysts76.47
Price Target232.56 (29.61%)
Short Float %1.56%
Short Ratio2.5
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.63% |
Yearly Dividend2.87
Dividend Growth(5Y)8.56%
DP34.79%
Div Incr Years24
Div Non Decr Years24
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)13.41%
Min EPS beat(2)1.08%
Max EPS beat(2)25.75%
EPS beat(4)4
Avg EPS beat(4)6.95%
Min EPS beat(4)0.04%
Max EPS beat(4)25.75%
EPS beat(8)8
Avg EPS beat(8)5.91%
EPS beat(12)11
Avg EPS beat(12)6.79%
EPS beat(16)15
Avg EPS beat(16)6.55%
Revenue beat(2)1
Avg Revenue beat(2)-1.2%
Min Revenue beat(2)-2.69%
Max Revenue beat(2)0.3%
Revenue beat(4)1
Avg Revenue beat(4)-2.87%
Min Revenue beat(4)-7.43%
Max Revenue beat(4)0.3%
Revenue beat(8)2
Avg Revenue beat(8)-2.54%
Revenue beat(12)5
Avg Revenue beat(12)-1.28%
Revenue beat(16)8
Avg Revenue beat(16)-0.73%
PT rev (1m)-2.98%
PT rev (3m)0.11%
EPS NQ rev (1m)-0.04%
EPS NQ rev (3m)1.54%
EPS NY rev (1m)-1.32%
EPS NY rev (3m)0%
Revenue NQ rev (1m)0.23%
Revenue NQ rev (3m)-2.72%
Revenue NY rev (1m)-0.56%
Revenue NY rev (3m)-2.12%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 19.48 | ||
| Fwd PE | 17.45 | ||
| P/S | 2.51 | ||
| P/FCF | 20.84 | ||
| P/OCF | 16.78 | ||
| P/B | 7.57 | ||
| P/tB | 33.34 | ||
| EV/EBITDA | 13.75 |
EPS(TTM)9.21
EY5.13%
EPS(NY)10.29
Fwd EY5.73%
FCF(TTM)8.61
FCFY4.8%
OCF(TTM)10.69
OCFY5.96%
SpS71.55
BVpS23.69
TBVpS5.38
PEG (NY)11.16
PEG (5Y)1.33
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 13.24% | ||
| ROE | 35.11% | ||
| ROCE | 26.24% | ||
| ROIC | 20.63% | ||
| ROICexc | 24.05% | ||
| ROICexgc | 43.81% | ||
| OM | 17.29% | ||
| PM (TTM) | 11.63% | ||
| GM | 36.87% | ||
| FCFM | 12.03% |
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-Score5
Asset Turnover1.14
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.87 | ||
| Debt/FCF | 2.61 | ||
| Debt/EBITDA | 1.49 | ||
| Cap/Depr | 132.15% | ||
| Cap/Sales | 2.91% | ||
| Interest Coverage | 13.52 | ||
| Cash Conversion | 76.65% | ||
| Profit Quality | 103.49% | ||
| Current Ratio | 1.87 | ||
| Quick Ratio | 1.25 | ||
| Altman-Z | 6.34 |
F-Score5
WACC9.71%
ROIC/WACC2.12
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 Y1.75%
EPS Next 2Y5.28%
EPS Next 3Y5.39%
EPS Next 5Y10.41%
Revenue 1Y (TTM)-4.37%
Revenue growth 3Y7.42%
Revenue growth 5Y5.94%
Sales Q2Q%2.36%
Revenue Next Year1.08%
Revenue Next 2Y3.05%
Revenue Next 3Y3.29%
Revenue Next 5Y6.2%
EBIT growth 1Y-5.28%
EBIT growth 3Y12.31%
EBIT growth 5Y11.6%
EBIT Next Year20.52%
EBIT Next 3Y10.75%
EBIT Next 5Y11.15%
FCF growth 1Y-16.34%
FCF growth 3Y16.82%
FCF growth 5Y7.65%
OCF growth 1Y-10.27%
OCF growth 3Y17.94%
OCF growth 5Y8.24%