ESAB Corp (ESAB) stock analysis

P/E above its 5-year median

ESAB's P/E of 29.8 is above its own 5-year median of 24.3.

P/E above the industry

ESAB's P/E of 29.8 is above the General Industrial Machinery and Equipment median of 26.9.

EV/EBITDA above its 5-year median

ESAB's EV/EBITDA of 16.1 is above its 5-year median of 13.9.

P/B below the industry

ESAB's price-to-book of 2.08 is below the General Industrial Machinery and Equipment median of 2.84.

Trading above fair value

The share price of $85.82 is above our fair value estimate of $78.32.

Margin of safety under 20%

The price is 9.6% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 3.1% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew -0.2% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew -35.5% over the last twelve months, against a 5-year average of 7.6% a year.

Growing slower than the industry

Revenue grew 11.0% over the last twelve months; the General Industrial Machinery and Equipment median is 12.4%.

Guidance raised

ESAB raised its full-year 2026 total core sales growth outlook on Aug 6, 2026.

Gross margin slipping

Gross margin was 37.6% over the last twelve months, against 37.6% a year earlier.

Return on equity under 15%

Return on equity was 6.7% over the last twelve months and averaged 12.5% over five years; we look for 15% on both.

Return on capital under 10%

Return on invested capital was 6.9%, below the 10% that usually covers the cost of capital.

Return on equity below the industry

ESAB's return on equity of 6.7% is below the General Industrial Machinery and Equipment median of 9.9%.

Earnings grew over 5 years

Net income grew 7.6% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 5.1% over the last twelve months, against a 5-year average of 8.7%.

Net margin below the industry

ESAB's net margin of 5.1% is below the General Industrial Machinery and Equipment median of 8.0%.

High debt

Debt is 91.0% of shareholders' equity, above the 40% we consider low.

Debt trend

Needs a balance sheet from five years ago with positive equity.

Debt not well covered by cash flow

Operating cash flow over the last twelve months equals 10.7% of total debt; we look for at least 20%.

Interest coverage

Interest expense is not reported separately.

Short-term assets cover short-term debts

Current assets are 1.92 times current liabilities.

Bankruptcy risk in the grey zone

The Altman Z-score is 1.80; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

ESAB paid dividends worth 0.5% of the share price over the last twelve months.

Yield below Treasuries

The 0.5% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; ESAB yields 0.5%.

Dividend stability

Fewer than five years of dividend history.

Covered by earnings

Dividends take 16.5% of net income.

Covered by free cash flow

Dividends take 14.3% of free cash flow.