Analyzing Lincoln Electric (LECO) and Its Competitors

Lincoln Electric (NASDAQ:LECO) is one of 436 public companies in the “Machinery” industry, but how does it compare to its peers? We will compare Lincoln Electric to related companies based on the strength of its earnings, valuation, dividends, institutional ownership, profitability, risk and analyst recommendations.

Risk & Volatility

Lincoln Electric has a beta of 1.19, suggesting that its share price is 19% more volatile than the S&P 500. Comparatively, Lincoln Electric’s peers have a beta of 5.12, suggesting that their average share price is 412% more volatile than the S&P 500.

Profitability

This table compares Lincoln Electric and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lincoln Electric	12.40%	40.06%	15.86%
Lincoln Electric Competitors	-1,035.51%	-36.25%	-0.27%

Valuation and Earnings

This table compares Lincoln Electric and its peers revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Lincoln Electric	$4.23 billion	$520.53 million	27.63
Lincoln Electric Competitors	$4.72 billion	$361.11 million	6.53

Lincoln Electric’s peers have higher revenue, but lower earnings than Lincoln Electric. Lincoln Electric is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Analyst Ratings

This is a summary of current ratings and target prices for Lincoln Electric and its peers, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lincoln Electric	0	4	6	0	2.60
Lincoln Electric Competitors	4214	14729	18257	809	2.41

Lincoln Electric presently has a consensus price target of $319.11, suggesting a potential upside of 10.75%. As a group, “Machinery” companies have a potential upside of 29.59%. Given Lincoln Electric’s peers higher possible upside, analysts clearly believe Lincoln Electric has less favorable growth aspects than its peers.

Dividends

Lincoln Electric pays an annual dividend of $3.16 per share and has a dividend yield of 1.1%. Lincoln Electric pays out 30.3% of its earnings in the form of a dividend. As a group, “Machinery” companies pay a dividend yield of 2.7% and pay out 24.6% of their earnings in the form of a dividend. Lincoln Electric has increased its dividend for 30 consecutive years. Lincoln Electric lags its peers as a dividend stock, given its lower dividend yield and higher payout ratio.

Institutional and Insider Ownership

79.6% of Lincoln Electric shares are owned by institutional investors. Comparatively, 51.8% of shares of all “Machinery” companies are owned by institutional investors. 1.7% of Lincoln Electric shares are owned by insiders. Comparatively, 14.1% of shares of all “Machinery” companies are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

Lincoln Electric beats its peers on 8 of the 15 factors compared.

Lincoln Electric Company Profile

Lincoln Electric Holdings, Inc. is a manufacturer of welding, cutting and automation products. Its offerings include arc-welding equipment and consumables, plasma and oxyfuel cutting systems, robotic welding solutions and related automation technologies, as well as brazing and soldering products. Founded in 1895 by John C. Lincoln, the company serves customers across a range of industries, including manufacturing, infrastructure, energy and transportation. Its products and services are sold in markets around the world through its international operations and distribution network.