Reviewing Lincoln Electric (LECO) and Spx Flow (FLOW)

Lincoln Electric (NASDAQ: LECO) and Spx Flow (NYSE:FLOW) 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 earnings, risk, valuation, dividends, profitability, analyst recommendations and institutional ownership.

Institutional and Insider Ownership

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67.0% of Lincoln Electric shares are held by institutional investors. Comparatively, 87.6% of Spx Flow shares are held by institutional investors. 3.0% of Lincoln Electric shares are held by company insiders. Comparatively, 2.0% of Spx Flow shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

Lincoln Electric pays an annual dividend of $1.56 per share and has a dividend yield of 1.8%. Spx Flow does not pay a dividend. Lincoln Electric pays out 41.2% of its earnings in the form of a dividend. Lincoln Electric has increased its dividend for 14 consecutive years.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Lincoln Electric and Spx Flow, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lincoln Electric 0 3 7 0 2.70
Spx Flow 2 2 4 0 2.25

Lincoln Electric presently has a consensus price target of $104.67, indicating a potential upside of 18.86%. Spx Flow has a consensus price target of $50.20, indicating a potential upside of 5.46%. Given Lincoln Electric’s stronger consensus rating and higher possible upside, research analysts plainly believe Lincoln Electric is more favorable than Spx Flow.

Risk & Volatility

Lincoln Electric has a beta of 1.1, suggesting that its share price is 10% more volatile than the S&P 500. Comparatively, Spx Flow has a beta of 1.92, suggesting that its share price is 92% more volatile than the S&P 500.

Valuation & Earnings

This table compares Lincoln Electric and Spx Flow’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Lincoln Electric $2.62 billion 2.20 $247.50 million $3.79 23.23
Spx Flow $1.95 billion 1.04 $46.40 million $1.27 37.48

Lincoln Electric has higher revenue and earnings than Spx Flow. Lincoln Electric is trading at a lower price-to-earnings ratio than Spx Flow, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Lincoln Electric and Spx Flow’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Lincoln Electric 9.43% 28.76% 11.24%
Spx Flow 2.38% 6.13% 2.00%

Summary

Lincoln Electric beats Spx Flow on 13 of the 17 factors compared between the two stocks.

Lincoln Electric 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.

Spx Flow Company Profile

SPX FLOW, Inc. provides various engineered solutions worldwide. The company engineers, designs, manufactures, and markets products and solutions used to process, blend, filter, dry, meter, and transport fluids with a focus on original equipment installation, including turn-key systems, modular systems, and components, as well as aftermarket components and support services. It operates through three segments: Food and Beverage, Power and Energy, and Industrial. The Food and Beverage segment offers mixing, drying, evaporation, and separation systems and components; heat exchangers, and reciprocating and centrifugal pump technologies; and turn-key systems primarily under the Anhydro, APV, Bran+Luebbe, Gerstenberg Schroeder, LIGHTNIN, Seital, and Waukesha Cherry-Burrell brands. The Power and Energy segment provides pumps, valves, and related accessories primarily for customers in oil and gas, and nuclear and other conventional power industries under the APV, Bran+Luebbe, ClydeUnion Pumps, Copes-Vulcan, Dollinger Filtration, LIGHTNIN, M&J Valve, Plenty, and Vokes brands. The Industrial segment offers air dryers, filtration equipment, mixers, pumps, hydraulic technologies, and heat exchangers under the Airpel, APV, Bolting Systems, Delair, Deltech, Hankison, Jemaco, Johnson Pump, LIGHTNIN, Power Team, and Stone brands. This segment primarily serves customers in chemical, air treatment, mining, pharmaceutical, marine, shipbuilding, infrastructure construction, general industrial, and water treatment industries. SPX FLOW, Inc. is headquartered in Charlotte, North Carolina.

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