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 outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. LECO is quite expensive at the moment. It does show a decent growth rate.
1. Profitability
1.1 Basic Checks
In the past year LECO was profitable.
LECO had a positive operating cash flow in the past year.
In the past 5 years LECO has always been profitable.
In the past 5 years LECO always reported a positive cash flow from operatings.
1.2 Ratios
LECO has a better Return On Assets (12.72%) than 89.06% of its industry peers.
LECO's Return On Equity of 34.41% is amongst the best of the industry. LECO outperforms 95.31% of its industry peers.
The Return On Invested Capital of LECO (20.27%) is better than 96.09% of its industry peers.
The Average Return On Invested Capital over the past 3 years for LECO is significantly above the industry average of 10.72%.
| 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 78.91% of its industry peers.
LECO's Profit Margin has improved in the last couple of years.
LECO has a Operating Margin of 16.98%. This is in the better half of the industry: LECO outperforms 79.69% of its industry peers.
LECO's Operating Margin has improved in the last couple of years.
The Gross Margin of LECO (36.58%) is better than 66.41% of its industry peers.
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
LECO has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
Compared to 1 year ago, LECO has less shares outstanding
LECO has less shares outstanding than it did 5 years ago.
LECO has a worse debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 6.58 indicates that LECO is not in any danger for bankruptcy at the moment.
LECO has a Altman-Z score of 6.58. This is amongst the best in the industry. LECO outperforms 87.50% 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.
Looking at the Debt to FCF ratio, with a value of 2.36, LECO is in the better half of the industry, outperforming 73.44% of the companies in the same industry.
A Debt/Equity ratio of 0.87 indicates that LECO is somewhat dependend on debt financing.
With a Debt to Equity ratio value of 0.87, LECO is not doing good in the industry: 74.22% of the companies in the same industry are doing better.
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 | 0.87 | ||
| Debt/FCF | 2.36 | ||
| Altman-Z | 6.58 |
ROIC/WACC2.04
WACC9.95%
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 61.72% 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.
The current and quick ratio evaluation for LECO is rather negative, while it does have 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
LECO shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -3.26%.
LECO shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 14.62% yearly.
The Revenue has decreased by -2.46% in the past 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)-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 10.22% on average per year.
Based on estimates for the next years, LECO will show a small growth in Revenue. The Revenue will grow by 5.51% on average per year.
EPS Next Y-1.1%
EPS Next 2Y4.48%
EPS Next 3Y5.56%
EPS Next 5Y10.22%
Revenue Next Year2.22%
Revenue Next 2Y3.34%
Revenue Next 3Y3.64%
Revenue Next 5Y5.51%
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
The Price/Earnings ratio is 22.39, which indicates a rather expensive current valuation of LECO.
The rest of the industry has a similar Price/Earnings ratio as LECO.
The average S&P500 Price/Earnings ratio is at 26.91. LECO is around the same levels.
The Price/Forward Earnings ratio is 20.35, which indicates a rather expensive current valuation of LECO.
LECO's Price/Forward Earnings ratio is in line with the industry average.
When comparing the Price/Forward Earnings ratio of LECO to the average of the S&P500 Index (21.46), we can say LECO is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.39 | ||
| Fwd PE | 20.35 |
4.2 Price Multiples
LECO's Enterprise Value to EBITDA is on the same level as the industry average.
Based on the Price/Free Cash Flow ratio, LECO is valued a bit cheaper than 60.16% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 21.55 | ||
| EV/EBITDA | 15.95 |
4.3 Compensation for Growth
LECO has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)1.53
EPS Next 2Y4.48%
EPS Next 3Y5.56%
5. Dividend
5.1 Amount
LECO has a Yearly Dividend Yield of 1.49%. Purely for dividend investing, there may be better candidates out there.
LECO's Dividend Yield is a higher than the industry average which is at 1.94.
LECO's Dividend Yield is slightly below the S&P500 average, which is at 2.43.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.49% |
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 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
LECO pays out 35.53% of its income as dividend. This is a 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.
DP35.53%
EPS Next 2Y4.48%
EPS Next 3Y5.56%
NASDAQ:LECO (6/25/2025, 12:10:05 PM)
206.18
+0.06 (+0.03%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryMachinery
Earnings (Last)
Earnings (Next)
Inst Owners80.56%
Inst Owner Change-0.93%
Ins Owners1.47%
Ins Owner Change1.49%
Market Cap11.51B
Analysts77.5
Price Target216.37 (4.94%)
Short Float %1.84%
Short Ratio2.82
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.49% |
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)-1.16%
PT rev (3m)-9.73%
EPS NQ rev (1m)0.3%
EPS NQ rev (3m)-2.5%
EPS NY rev (1m)-0.17%
EPS NY rev (3m)-4.08%
Revenue NQ rev (1m)0.57%
Revenue NQ rev (3m)1.73%
Revenue NY rev (1m)0.14%
Revenue NY rev (3m)0.56%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.39 | ||
| Fwd PE | 20.35 | ||
| P/S | 2.86 | ||
| P/FCF | 21.55 | ||
| P/OCF | 17.67 | ||
| P/B | 8.59 | ||
| P/tB | 21.86 | ||
| EV/EBITDA | 15.95 |
EPS(TTM)9.21
EY4.47%
EPS(NY)10.13
Fwd EY4.91%
FCF(TTM)9.57
FCFY4.64%
OCF(TTM)11.67
OCFY5.66%
SpS72.22
BVpS24
TBVpS9.43
PEG (NY)N/A
PEG (5Y)1.53
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 | 6.58 |
F-Score6
WACC9.95%
ROIC/WACC2.04
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-1.1%
EPS Next 2Y4.48%
EPS Next 3Y5.56%
EPS Next 5Y10.22%
Revenue 1Y (TTM)-2.46%
Revenue growth 3Y7.42%
Revenue growth 5Y5.94%
Sales Q2Q%2.36%
Revenue Next Year2.22%
Revenue Next 2Y3.34%
Revenue Next 3Y3.64%
Revenue Next 5Y5.51%
EBIT growth 1Y-5.84%
EBIT growth 3Y12.31%
EBIT growth 5Y11.6%
EBIT Next Year16.2%
EBIT Next 3Y9.48%
EBIT Next 5Y10.45%
FCF growth 1Y36.18%
FCF growth 3Y16.82%
FCF growth 5Y7.65%
OCF growth 1Y40.32%
OCF growth 3Y17.94%
OCF growth 5Y8.24%