Lincoln Electric Holdings Inc (LECO) stock analysis

P/E above its 5-year median

Lincoln Electric's P/E of 27.6 is above its own 5-year median of 24.9.

P/E above the industry

Lincoln Electric's P/E of 27.6 is above the Industrial and Commercial Machinery and Computer Equipment median of 27.5.

EV/EBITDA above its 5-year median

Lincoln Electric's EV/EBITDA of 18.2 is above its 5-year median of 16.7.

P/B above the industry

Lincoln Electric's price-to-book of 10.04 is above the Industrial and Commercial Machinery and Computer Equipment median of 2.71.

Trading above fair value

The share price of $288.14 is above our fair value estimate of $239.26.

Margin of safety under 20%

The price is 20.4% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 4.0% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew 5.0% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew 9.6% over the last twelve months, against a 5-year average of 20.4% a year.

Growing faster than the industry

Revenue grew 11.1% over the last twelve months; the Industrial and Commercial Machinery and Computer Equipment median is 10.1%.

Company guidance

No outlook found in earnings releases from the last twelve months.

Gross margin slipping

Gross margin was 35.5% over the last twelve months, against 36.6% a year earlier.

Return on equity over 15%

Return on equity was 38.7% over the last twelve months and averaged 40.5% over five years.

Return on capital over 10%

Return on invested capital was 25.6%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Lincoln Electric's return on equity of 38.7% is above the Industrial and Commercial Machinery and Computer Equipment median of 7.0%.

Earnings grew over 5 years

Net income grew 20.4% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 12.4% over the last twelve months, against a 5-year average of 11.6%.

Net margin above the industry

Lincoln Electric's net margin of 12.4% is above the Industrial and Commercial Machinery and Computer Equipment median of 4.8%.

High debt

Debt is 74.0% of shareholders' equity, above the 40% we consider low.

Debt falling against equity

Debt to equity fell from 90.9% five years ago to 74.0%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 58.0% of total debt.

Interest well covered

Operating income covers interest expense 14.3 times.

Short-term assets cover short-term debts

Current assets are 1.91 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 7.82; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Lincoln Electric paid dividends worth 1.1% of the share price over the last twelve months.

Yield below Treasuries

The 1.1% 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; Lincoln Electric yields 1.1%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 30.0% of net income.

Covered by free cash flow

Dividends take 33.7% of free cash flow.