Lincoln Electric Holdings (NASDAQ: LECO) and Simpson Manufacturing Company (NYSE:SSD) are both mid-cap industrial products companies, but which is the superior investment? We will compare the two companies based on the strength of their profitabiliy, earnings, dividends, risk, analyst recommendations, valuation and institutional ownership.
This table compares Lincoln Electric Holdings and Simpson Manufacturing Company’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Lincoln Electric Holdings||8.70%||30.17%||11.97%|
|Simpson Manufacturing Company||10.95%||10.08%||8.85%|
This is a breakdown of current ratings and price targets for Lincoln Electric Holdings and Simpson Manufacturing Company, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Lincoln Electric Holdings||0||8||1||0||2.11|
|Simpson Manufacturing Company||0||1||0||0||2.00|
Lincoln Electric Holdings currently has a consensus price target of $78.33, suggesting a potential downside of 18.83%. Given Lincoln Electric Holdings’ stronger consensus rating and higher probable upside, equities analysts plainly believe Lincoln Electric Holdings is more favorable than Simpson Manufacturing Company.
Valuation and Earnings
This table compares Lincoln Electric Holdings and Simpson Manufacturing Company’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Lincoln Electric Holdings||$2.30 billion||2.76||$401.68 million||$2.99||32.28|
|Simpson Manufacturing Company||$881.00 million||2.36||$165.73 million||$2.00||21.86|
Lincoln Electric Holdings has higher revenue and earnings than Simpson Manufacturing Company. Simpson Manufacturing Company is trading at a lower price-to-earnings ratio than Lincoln Electric Holdings, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Lincoln Electric Holdings has a beta of 0.91, indicating that its share price is 9% less volatile than the S&P 500. Comparatively, Simpson Manufacturing Company has a beta of 1.42, indicating that its share price is 42% more volatile than the S&P 500.
Insider & Institutional Ownership
64.6% of Lincoln Electric Holdings shares are owned by institutional investors. Comparatively, 83.4% of Simpson Manufacturing Company shares are owned by institutional investors. 3.3% of Lincoln Electric Holdings shares are owned by insiders. Comparatively, 0.4% of Simpson Manufacturing Company shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Lincoln Electric Holdings pays an annual dividend of $1.40 per share and has a dividend yield of 1.5%. Simpson Manufacturing Company pays an annual dividend of $0.72 per share and has a dividend yield of 1.6%. Lincoln Electric Holdings pays out 46.8% of its earnings in the form of a dividend. Simpson Manufacturing Company pays out 36.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Lincoln Electric Holdings has increased its dividend for 3 consecutive years and Simpson Manufacturing Company has increased its dividend for 13 consecutive years. Simpson Manufacturing Company is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Lincoln Electric Holdings beats Simpson Manufacturing Company on 11 of the 17 factors compared between the two stocks.
Lincoln Electric Holdings Company Profile
Lincoln Electric Holdings, Inc. is a manufacturer of welding, cutting and brazing products. The Company operates through three segments: Americas Welding, International Welding and The Harris Products Group. The Americas Welding segment includes welding operations in North and South America. The International Welding segment primarily includes welding operations in Europe, Africa, Asia and Australia. The Harris Products Group includes the Company’s global cutting, soldering and brazing businesses, as well as the retail business in the United States. Its welding products include arc welding power sources, wire feeding systems, robotic welding packages, integrated automation systems, fume extraction equipment, consumable electrodes, fluxes and welding accessories, and specialty welding consumables and fabrication. Its product offerings also include computer numeric controlled plasma and oxy-fuel cutting systems, and regulators and torches used in oxy-fuel welding, cutting and brazing.
Simpson Manufacturing Company Company Profile
Simpson Manufacturing Co., Inc., through its subsidiary, Simpson Strong-Tie Company Inc. (SST), designs, engineers and manufactures wood construction products, including connectors, truss plates, fastening systems, fasteners and pre-fabricated lateral systems used in light-frame construction. The Company’s segments are North America, Europe, Asia/Pacific, and Administrative & All Other. The North America segment includes operations primarily in the United States and Canada. The Europe segment includes operations primarily in France, the United Kingdom, Germany, Denmark, Switzerland, Portugal, Poland, the Netherlands and Belgium. The Asia/Pacific segment includes operations primarily in Australia, New Zealand, South Africa, China, Taiwan and Vietnam. The Company manufactures concrete construction products used for concrete, masonry, steel construction and for concrete repair, protection and strengthening, including adhesives, chemicals and mechanical anchors.
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