As the manufacturing sector evolves, two key players, Lincoln Electric Holdings, Inc. (LECO) and ESAB Corporation (ESAB), have emerged as significant competitors in the welding and fabrication industries. Both companies are at the forefront of innovation and cater to overlapping markets, yet they adopt distinct strategies in product development and customer engagement. In this article, I will analyze their strengths and weaknesses to help you determine which company may be a more compelling investment opportunity.
Table of contents
Company Overview
Lincoln Electric Holdings, Inc. Overview
Lincoln Electric Holdings, Inc. (LECO) is a leader in the design, development, and manufacture of welding, cutting, and brazing products. With a market capitalization of approximately $13.17B, the company operates through three primary segments: Americas Welding, International Welding, and The Harris Products Group. Founded in 1895 and headquartered in Cleveland, Ohio, Lincoln Electric serves a wide range of industries, including automotive, construction, and heavy fabrication. The company is known for its extensive product offerings, including arc welding power sources, plasma cutters, and robotic welding packages. With a focus on innovation and customer service, Lincoln Electric has developed a strong reputation globally, reflecting its commitment to quality and technological advancement.
ESAB Corporation Overview
ESAB Corporation (ESAB), incorporated in 2021, specializes in providing consumable products and equipment for cutting, joining, and automated welding. With a market cap of around $6.81B, the company offers a diverse range of products including welding consumables, cutting equipment, and digital solutions aimed at enhancing productivity. Headquartered in Wilmington, Delaware, ESAB caters to various sectors such as construction, energy, and healthcare. It leverages a strong distribution network to deliver its products, ensuring accessibility and efficiency in operations. ESAB’s dedication to innovation, particularly in digital solutions, positions it well in an increasingly automated industry.
Key similarities and differences
Both Lincoln Electric and ESAB operate within the industrial manufacturing sector, focusing on welding and cutting solutions. However, Lincoln Electric has a longstanding presence in the market with an extensive product portfolio and established brand reputation, while ESAB, being a newer company, emphasizes digital solutions alongside traditional products. Their distribution approaches also differ, with Lincoln relying more on direct sales and ESAB leveraging independent distributors.
Income Statement Comparison
In this section, I present a comprehensive comparison of the most recent income statements for Lincoln Electric Holdings, Inc. (LECO) and ESAB Corporation (ESAB), highlighting key financial metrics.
| Metric | Lincoln Electric (LECO) | ESAB Corporation (ESAB) |
|---|---|---|
| Market Cap | 13.17B | 6.81B |
| Revenue | 4.01B | 2.74B |
| EBITDA | 800.52M | 531.41M |
| EBIT | 712.28M | 464.81M |
| Net Income | 466.11M | 264.84M |
| EPS | 8.23 | 4.36 |
| Fiscal Year | 2024 | 2024 |
Interpretation of Income Statement
Over the latest fiscal year, Lincoln Electric (LECO) demonstrated a slight decline in revenue from 4.19B to 4.01B, while ESAB experienced a decrease from 2.77B to 2.74B. Both companies faced challenges in maintaining revenue growth, with LECO’s net income also declining from 545.25M to 466.11M. However, LECO’s EBITDA margin indicates resilience, reflecting effective cost management strategies. ESAB’s margins remained stable, showcasing operational efficiency despite a competitive landscape. Overall, both firms exhibit cautious performance, suggesting a need for strategic adjustments to enhance future growth trajectories.
Financial Ratios Comparison
In this section, I present a comparison of the most recent financial metrics for Company A (Lincoln Electric Holdings, Inc.) and Company B (ESAB Corporation). The following table summarizes key revenue and financial ratios.
| Metric | Lincoln Electric (LECO) | ESAB Corporation (ESAB) |
|---|---|---|
| ROE | 35.11% | 14.97% |
| ROIC | 18.06% | 10.30% |
| P/E | 22.78 | 27.37 |
| P/B | 8.00 | 4.10 |
| Current Ratio | 1.87 | 1.82 |
| Quick Ratio | 1.25 | 1.18 |
| D/E | 0.99 | 0.66 |
| Debt-to-Assets | 37.39% | 28.84% |
| Interest Coverage | 14.88 | 6.90 |
| Asset Turnover | 1.14 | 0.68 |
| Fixed Asset Turnover | 6.47 | 7.06 |
| Payout Ratio | 34.79% | 6.42% |
| Dividend Yield | 1.53% | 0.23% |
Interpretation of Financial Ratios
Lincoln Electric demonstrates stronger return metrics (ROE and ROIC) compared to ESAB, indicating better efficiency in generating profits. However, ESAB showcases a lower debt-to-assets ratio, suggesting a more conservative approach to leveraging. Both companies maintain healthy liquidity ratios, although Lincoln Electric’s interest coverage indicates a stronger ability to meet interest obligations. Concerns may arise from Lincoln’s higher P/E and P/B ratios, potentially reflective of overvaluation risks.
Dividend and Shareholder Returns
Lincoln Electric Holdings, Inc. (LECO) offers a dividend with a payout ratio of approximately 34.8% and a yield of 1.53%. The company has consistently shown a trend of increasing dividends, although risks include potential unsustainable distributions amid market volatility. Conversely, ESAB Corporation (ESAB) does not pay dividends, reflecting a reinvestment strategy aimed at growth and innovation. However, it engages in share buybacks, which may enhance shareholder value. Overall, LECO’s dividend payments support sustainable long-term value creation, while ESAB’s strategy might be more beneficial for growth-focused investors.
Strategic Positioning
Lincoln Electric (LECO) holds a strong position in the welding and cutting market with a market cap of 13.2B, while ESAB Corporation (ESAB) follows with a 6.8B market cap. Both companies face competitive pressure amid technological disruptions and evolving customer demands. LECO’s diverse product range and established market presence give it an edge, but ESAB’s innovation in digital solutions enhances its competitive stance. Investors should monitor these dynamics when considering their portfolios.
Stock Comparison
Over the past year, both Lincoln Electric Holdings, Inc. (LECO) and ESAB Corporation (ESAB) have demonstrated notable price movements, reflecting the dynamic trading conditions in their respective markets.
Trend Analysis
Lincoln Electric Holdings, Inc. (LECO)
- Percentage change over the past year: +13.35%
- Trend direction: Bullish
- Notable high: $258.04
- Notable low: $172.02
- Acceleration status: Deceleration
- Standard deviation: 22.74
The stock has shown a solid bullish trend, but the recent analysis indicates a deceleration in momentum, suggesting a potential stabilization phase.
ESAB Corporation (ESAB)
- Percentage change over the past year: +32.95%
- Trend direction: Bullish
- Notable high: $133.28
- Notable low: $83.93
- Acceleration status: Deceleration
- Standard deviation: 12.53
Similarly, ESAB has experienced strong price growth with a bullish trend. However, the deceleration in acceleration may point to a cooling off period after significant gains.
Both stocks are currently in a bullish trend, but investors should be cautious of potential slowing momentum as indicated by their deceleration status.
Analyst Opinions
Recent recommendations for Lincoln Electric Holdings, Inc. (LECO) indicate a “Buy” rating from analysts, reflecting strong performance in return on equity (5) and return on assets (5). In contrast, ESAB Corporation (ESAB) has received a “Hold” rating, with analysts citing solid fundamentals but concerns over its price-to-book ratio (2). Overall, the consensus for LECO is a clear Buy, while ESAB leans towards a Hold. This assessment stems from analysts focusing on financial stability and growth potential in their evaluations.
Stock Grades
In the current market landscape, it’s essential to stay informed about stock ratings from reputable sources. Below are the latest stock grades for Lincoln Electric Holdings, Inc. and ESAB Corporation.
Lincoln Electric Holdings, Inc. Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Stifel | maintain | Hold | 2025-10-31 |
| Barclays | maintain | Overweight | 2025-10-20 |
| Keybanc | maintain | Overweight | 2025-08-01 |
| Stifel | maintain | Hold | 2025-08-01 |
| Stifel | maintain | Hold | 2025-07-21 |
| Keybanc | maintain | Overweight | 2025-07-15 |
| Morgan Stanley | maintain | Underweight | 2025-05-06 |
| Keybanc | maintain | Overweight | 2025-05-01 |
| Baird | maintain | Outperform | 2025-05-01 |
| Stifel | maintain | Hold | 2025-05-01 |
ESAB Corporation Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| JP Morgan | maintain | Overweight | 2025-10-30 |
| UBS | maintain | Buy | 2025-10-20 |
| JP Morgan | maintain | Overweight | 2025-10-14 |
| Loop Capital | upgrade | Buy | 2025-08-22 |
| JP Morgan | maintain | Overweight | 2025-08-07 |
| Stifel | upgrade | Buy | 2025-08-07 |
| Oppenheimer | maintain | Outperform | 2025-08-07 |
| Stifel | maintain | Hold | 2025-07-21 |
| Evercore ISI Group | maintain | In Line | 2025-05-19 |
| Stifel | maintain | Hold | 2025-05-02 |
Overall, both companies show a trend of maintenance in their grades, with a mix of holds and overweight ratings, indicating a stable outlook amidst market fluctuations. Notably, ESAB has seen some upgrades recently, suggesting a positive shift in investor sentiment.
Target Prices
The target consensus for Lincoln Electric Holdings, Inc. (LECO) and ESAB Corporation (ESAB) shows a positive outlook from analysts.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| Lincoln Electric Holdings, Inc. | 285 | 260 | 272.5 |
| ESAB Corporation | 150 | 140 | 146.33 |
For Lincoln Electric, the target consensus of 272.5 is significantly higher than its current price of 239.43, indicating strong growth potential. Similarly, ESAB’s consensus target of 146.33 also surpasses its price of 112.24, suggesting a favorable outlook from analysts.
Strengths and Weaknesses
The following table outlines the strengths and weaknesses of Lincoln Electric Holdings, Inc. (LECO) and ESAB Corporation (ESAB) based on the most recent financial data.
| Criterion | Lincoln Electric (LECO) | ESAB Corporation (ESAB) |
|---|---|---|
| Diversification | High – Multiple segments | Moderate – Focused on welding and cutting |
| Profitability | Strong – Net margin 11.6% | Moderate – Net margin 7.4% |
| Innovation | High – Advanced welding tech | Moderate – Digital solutions |
| Global presence | Extensive – 70+ countries | Growing – Focused on key markets |
| Market Share | Leading in welding industry | Emerging player in metal fabrication |
| Debt level | Moderate – Debt to equity 0.99 | Low – Debt to equity 0.66 |
Key takeaways indicate that Lincoln Electric boasts strong profitability and extensive global presence, while ESAB is focusing on innovation and has a lower debt level, making it a potentially attractive option for risk-averse investors.
Risk Analysis
The table below outlines the various risks associated with Lincoln Electric Holdings, Inc. (LECO) and ESAB Corporation (ESAB).
| Metric | Lincoln Electric (LECO) | ESAB Corporation (ESAB) |
|---|---|---|
| Market Risk | Moderate | Moderate |
| Regulatory Risk | High | Moderate |
| Operational Risk | Moderate | High |
| Environmental Risk | Low | Moderate |
| Geopolitical Risk | Moderate | High |
Both companies face significant regulatory and operational risks, particularly due to their reliance on global supply chains and environmental regulations. Recent geopolitical tensions may further impact operational costs and market access.
Which one to choose?
In comparing Lincoln Electric Holdings, Inc. (LECO) and ESAB Corporation (ESAB), both companies show promising fundamentals, but LECO appears to have a stronger position. LECO’s gross profit margin stands at 36.8%, compared to ESAB’s 37.9%, yet LECO outperforms in net profit margin (11.6% vs. 9.7%). The price-to-earnings ratio for LECO is 22.8, while ESAB’s is higher at 27.4, suggesting LECO may be more attractively valued. Analyst ratings are B for LECO and B- for ESAB, with LECO also showing a bullish stock trend.
For growth-oriented investors, ESAB might be appealing given its recent price increase of 32.95%. Conversely, those seeking stability may prefer LECO, which boasts a better profit margin and lower valuation metrics. However, both face risks from supply chain issues and market competition.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Go further
I encourage you to read the complete analyses of Lincoln Electric Holdings, Inc. and ESAB Corporation to enhance your investment decisions:
