Contrasting Lincoln Electric (LECO) & Makita (MKTAY)

Lincoln Electric (NASDAQ:LECO) and Makita (OTCMKTS:MKTAY) are both industrial products companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, risk, earnings, profitability, institutional ownership, valuation and analyst recommendations.

Dividends

Lincoln Electric pays an annual dividend of $1.56 per share and has a dividend yield of 1.9%. Makita pays an annual dividend of $0.34 per share and has a dividend yield of 0.9%. Lincoln Electric pays out 41.2% of its earnings in the form of a dividend. Makita pays out 18.3% 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 has increased its dividend for 14 consecutive years. Lincoln Electric is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Lincoln Electric and Makita’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Lincoln Electric $2.62 billion 2.06 $247.50 million $3.79 22.17
Makita $4.41 billion 2.28 $492.79 million $1.86 19.30

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

Analyst Recommendations

This is a summary of current recommendations and price targets for Lincoln Electric and Makita, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lincoln Electric 0 2 7 0 2.78
Makita 0 1 0 0 2.00

Lincoln Electric currently has a consensus price target of $101.50, indicating a potential upside of 20.78%. Given Lincoln Electric’s stronger consensus rating and higher probable upside, equities analysts plainly believe Lincoln Electric is more favorable than Makita.

Insider & Institutional Ownership

71.2% of Lincoln Electric shares are held by institutional investors. Comparatively, 0.5% of Makita shares are held by institutional investors. 3.0% of Lincoln Electric shares are held by company insiders. Comparatively, 1.0% of Makita shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Risk & Volatility

Lincoln Electric has a beta of 1.27, suggesting that its stock price is 27% more volatile than the S&P 500. Comparatively, Makita has a beta of 0.87, suggesting that its stock price is 13% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Lincoln Electric 7.40% 31.77% 12.34%
Makita 11.47% 10.14% 8.65%

Summary

Lincoln Electric beats Makita on 11 of the 17 factors compared between the two stocks.

About Lincoln Electric

Lincoln Electric Holdings, Inc., through its subsidiaries, designs, manufactures, and sells welding, cutting, and brazing products worldwide. It operates through three segments: Americas Welding, International Welding, and The Harris Products Group. The company's welding products include arc welding power sources, plasma cutters, wire feeding systems, robotic welding packages, integrated automation systems, fume extraction equipment, consumable electrodes, fluxes and welding accessories, and specialty welding consumables and fabrication products. It also provides computer numeric controlled plasma and oxy-fuel cutting systems, and regulators and torches used in oxy-fuel welding, cutting, and brazing; and consumables used in the brazing and soldering alloys market. In addition, the company is involved in the retail business in the United States. It serves general fabrication, energy and process, automotive and transportation, heavy fabrication, and construction and infrastructure industries, as well as ship building and maintenance and repair markets. The company sells its products directly to users of welding products, as well as through industrial distributors, retailers, and agents. Lincoln Electric Holdings, Inc. was founded in 1895 and is headquartered in Cleveland, Ohio.

About Makita

Makita Corporation engages in the manufacture and wholesale of electric power tools, woodworking machines, pneumatic tools, and gardening and household equipment. The company operates through Japan Group, Europe Group, North America Group, Asia Group, and Other Regions Group segments. It offers cordless, drilling/fastening, impact drilling/demolition, grinding/sandling, sawing, planning/routering, pneumatic, outdoor power, and dust extraction/other equipment, as well as accessories; and cutting equipment for new materials, masonry, and metals. The company also provides sanders, hammer drills, rotary hammers, and circular saws. Makita Corporation markets its products under the Makita or Maktec brands in Japan, Europe, North America, Asia, Australia, Brazil, and the United Arab Emirates. The company was formerly known as Makita Electric Works, Ltd. and changed its name to Makita Corporation in April 1991. Makita Corporation was founded in 1915 and is headquartered in Anjo, Japan.

Receive News & Ratings for Lincoln Electric Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Lincoln Electric and related companies with MarketBeat.com's FREE daily email newsletter.


Leave a Reply