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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Lincoln Electric Holdings, Inc. (XNAS:LECO) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
LECO
Name:
LINCOLN ELECTRIC HOLDINGS, INC. (XNAS:LECO)
Sector:
24.42M
Industry:
Tools & Accessories
CEO:
Mr. Christopher Mapes
Total Employees:
11,000
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -101.51% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF LINCOLN ELECTRIC HOLDINGS, INC.(LECO) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND TOOLS & ACCESSORIES INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
135.51
One Month Price Target:
$136.39
Six Month Price Target :
$140.81
Likely Price in One Year's Time:
Ticker:
$146.1
Likely Trading Range Today Under (Normal Volatility)
$135.15
Price Upper limit ($) :
$136.06
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$130.13
This week:
$123.47
This month :
$111.44
Other Primary facts
Market Cap:
7.86B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
57.92M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
10.65%
-11.5%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$160.47
$148.90
$110.55
$122.12
Medium risk (<10%) entry points
Buy Call
Sell Call
$145.14
Buy Put:
Sell Put:
$142.67
$125.85
$128.35
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
LECO
Sharpe Ratio:
3.19%
Comparison:
LECO, is amongst the top 20% stocks with highest risk-adjusted returns
Sharpe ratio is 138.53% higher than the industry
& ratio is 40.07% higher than the market/S&P 500 average
Average Returns/Yield of
LECO
Daily returns:
0.07%
Weekly returns:
0.36%
Monthly returns:
1.43%
Yearly returns:
10.57%
Comparison of returns:
Average annual returns/yield (last 3 years) is 62.77% above industry average
Classification:
LECO, is amongst the top 40% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.28
Statistical test of Returns:
LECO has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
1.97%
Weekly Volatility:
4.40%
Monthly Volatility:
8.81%
Yearly Volatility:
30.50%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.79%
Volatility in last five trading days has been -59.88% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-3.97%
Weekly VaR:
-8.88%
Monthly VaR:
-17.76%
How Much Can the price of
LECO
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-15%
Worst case (decline):
-61.54%
This translates to price declining to:
$115.34
This translates to price declining to:
$52.12
Severe Crash Probability
Risk of crash in next 6/12 months: High (50-70%)
What is Value at Risk (VaR)?
Risk Fundamentals
LECO is a 25.38% riskier investment compared to the market/S&P 500 & is 7.41% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -25.45% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
LECO
Beta in relation to market/S&P 500--1.16
Expected beta in 1 year's time:
0.757
Expected beta in 3 year's time:
1.071
Unlevered (debt free) Beta:
0.683
Beta in relation to Nasdaq (XNAS):
0.67
Beta in relation to all global stocks::
0.71
Beta Comparison & Analysis
Beta of competitors/peers::
1.322
Beta is -11.98% lower than peers
Average Industry Beta:
1.226
Beta is -5.11% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
18.03%
Sustainable growth rate is 46.67% above industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.061
Alpha is -725.27% below industry average alpha yield
Alpha is 388% higher than market/& is unsustainably high
Analysis of Cost of Capital of
LECO
Equity cost of capital:
0.111
Equity cost of capital is -3.71% below industry mean WACC
Unlevered (without debt) cost of capital:
6.53%
Before-tax cost of debt:
2.66%
After-tax cost of debt:
2.10%
Overall debt rating:
High AA grade (second highest grade)
Weighted average cost of capital (WACC):
2.10%
WACC is -11.41% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$58.75
Revenue growth rate per share of (3Y):
9.09
Annual revenue growth rate is 40.74% above the industry average
EPS:
$5.50
Expected Annual growth rate of EPS (3Y):
-0.92%
Expected future EPS growth rate is -58.96% lower than the Tools & Accessories industry
Free cash flow (FCF) per share:
$4.92
Balance sheet equity growth per share: 30.62%
Equity growth rate per share is 156.02% higher than the industry
Debt per share
$12.35
EBITDA per share
$8.50
Valuation Analysis Today of
LECO
P/E Ratio:
22.29
P/E Ratio of Competitors/Peers:
28.85
P/E ratio is -22.72% lower than main peers & is -35.60% lower than the industry
Stock price/value with industry average P/E ratio: $190.38
LECO is -28.82% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $34.72
Present value of the expected future dividends only: $22.82
P/S (Price to Sales ratio):
2.31
Price to sales ratio is -20.66% below the industry mean
P/B (Price to book value ratio):
9.09
Price to free cash flow: 27.54
Price to free cash flow ratio is -87.99% lower than the industry
Net income growth rate (3Y):
5.36%
Net income growth rate is -59.06% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 10.16%
Dividend yeild: 1.62%
Previous Dividend: $0.56
Previous adjusted dividend: $0.56
Previous Dividend: $2.19
Expected next dividend best case: $0.58
Expected next dividend worst case: $0.54
Average dividend payment (long-term): $0.52
Average dividend increase/decrease (growth rate) % per period: 1.39%
Expected next dividend payment date: 13/10/2022
Expected next dividend record date: 28/09/2022
-
Previous dividend payment date: 15/07/2022
Previous dividend record date: 30/06/2022
-
Dividend History:
2022-06-29--$0.56
2021-12-30--$0.56
2021-06-29--$0.51
2022-03-30--$0.56
2021-09-29--$0.51
2021-03-30--$0.51
Dividend growth rate is -42.13% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
82.84%
Net debt to equity ratio:
82.40%
Debt to assets ratio:
26.13%
Net debt to assets ratio:
25.99%
Debt-to-asset ratio is -54.62% below industry average
Ability to repay debt:
Interest coverage ratio:
21.36
Interest coverage ratio is 78.03% more than industry average
Looking forward:
Debt growth rate:
7.19%
Annual debt growth is -96% lower than industry average debt growth rate
Debt repayment rate in last quarter: 0.00%
Analysis of Key Statistics
Correlation of price movement with the market:
0.76
Statistical significance of correlation:
LECO has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.678
Stock price is 12.03% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.678
Correlation of price movement with Nasdaq (^IXIC):
0.016
Covariance of price movement with the market:
0.018
Kurtosis
5.541
Returns have moderate fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.111
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
LECO
Gross Profit Margin Ratio:
134%
Operating Profit Margin Ratio:
15.25%
Operating profit margin is 125.08% higher than the industry
Net Profit Margin Ratio:
134%
Effective Tax Rate:
15.23%
Effective tax rate is -11.80% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
38.04%
Return on equity (ROE) is 165.63% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
12.00%
Return on assets (ROA) is 113.42% higher than the industry
Financial Leverage:
1.4x
Current Ratio:
1.54
Current ratio is -26.84% below industry average
Cash Conversion Cycle (days):
15.2
Cash conversion cycle is -86.63% below industry average
The remaining useful life of property plant & equipment is: 1.0 years
Stock based compensation to net income ratio:
3.40%
In-depth Efficiency Analysis
Revenue generated per employee:
309.3K
Each employee generates 6% more revenue than industry average revenue per employee
EBITDA generated per employee:
44.8K
Each employee generates 1% more EBITDA than industry average revenue per employee
Profit generated per employee:
29.8K
Each employee generates 22% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
2.2K
Each employee generates 573% more free cash flow than industry average revenue per employee
Assets/Capital per employee
119.0K
Each employee generates 573% more free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
LECO
TuSimple Holdings Inc (XNAS:TSP)
WOODWARD, INC. (XNAS:WWD)
AXON ENTERPRISE, INC. (XNAS:AXON)
LANDSTAR SYSTEM, INC. (XNAS:LSTR)
TETRA TECH, INC. (XNAS:TTEK)
WILLSCOT MOBILE MINI HOLDINGS CORP. (XNAS:WSC)
SAIA, INC. (XNAS:SAIA)
JETBLUE AIRWAYS CORPORATION (XNAS:JBLU)
ELBIT SYSTEMS LTD (XNAS:ESLT)
Current Analyst Ratings
Strong buy�0%
Buy�17%
Hold�38%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
3.40B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
2.26B
1.14B
-
-
618.12M
-
-
618.12M
-
23.05M
81.92M
492.30M
518.95M
328.32M
387.49M
59.01M
328.32M
Statement of Cash Flow
Date:
Period:
19.89M
Differed Income Tax :
- 18207.00K
Stock Based Compensation :
11.15M
Change in Working Capital :
- 96686.00K
Accounts Receivables:
- 86120.00K
Other Working Capital:
- 1407.00K
Other Non-Cash Items:
914.00K
Net Cash Provided by Operating Activities:
43.09M
Investments in PP&E:
-
Net Acquisitions:
- 22013.00K
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
154.37M
-
154.37M
516.23M
599.78M
157.45M
1.43B
511.87M
437.14M
-
-
-
359.50M
1.31B
-
2.74B
369.42M
150.56M
-
-
407.68M
927.65M
715.03M
230.60M
945.63M
-
1.87B
9.86M
3.06B
- 259507.0K
-
March 31, 2022 at 6:00:00 AM
2.88B
863.12M
2.74B
-
865.59M
711.2M
-
- 18103.00K
- 40116.00K
-
-
- 104579.00K
- 33361.00K
97.34M
- 40597.00K
- 962.00K
- 38585.00K
154.37M
192.96M
43.09M
- 18672.00K
24.42M
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
LECO
2023
2024
2025
2026
2027
$160.98
$173.56
$187.13
$201.76
$217.54