Head-To-Head Contrast: Lincoln Electric (NASDAQ:LECO) & Sandvik (OTCMKTS:SDVKY)

Lincoln Electric (NASDAQ:LECO) and Sandvik (OTCMKTS:SDVKY) are both large-cap industrials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, profitability, earnings, dividends and valuation.

Dividends

Lincoln Electric pays an annual dividend of $3.00 per share and has a dividend yield of 1.2%. Sandvik pays an annual dividend of $0.35 per share and has a dividend yield of 1.5%. Lincoln Electric pays out 33.7% of its earnings in the form of a dividend. Sandvik pays out 31.3% 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 raised its dividend for 30 consecutive years. Sandvik is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares Lincoln Electric and Sandvik”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lincoln Electric	$4.01 billion	3.36	$466.11 million	$8.90	27.40
Sandvik	$11.62 billion	2.60	$1.16 billion	$1.12	21.49

Sandvik has higher revenue and earnings than Lincoln Electric. Sandvik 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 Ratings

This is a breakdown of recent ratings and price targets for Lincoln Electric and Sandvik, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lincoln Electric	1	1	3	0	2.40
Sandvik	1	1	2	1	2.60

Lincoln Electric currently has a consensus target price of $231.40, indicating a potential downside of 5.10%. Given Lincoln Electric’s higher possible upside, analysts clearly believe Lincoln Electric is more favorable than Sandvik.

Institutional & Insider Ownership

79.6% of Lincoln Electric shares are held by institutional investors. Comparatively, 0.7% of Sandvik shares are held by institutional investors. 2.4% of Lincoln Electric shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Risk & Volatility

Lincoln Electric has a beta of 1.21, meaning that its stock price is 21% more volatile than the S&P 500. Comparatively, Sandvik has a beta of 1.55, meaning that its stock price is 55% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Lincoln Electric	12.27%	39.79%	14.74%
Sandvik	11.89%	16.54%	8.51%

Summary

Lincoln Electric beats Sandvik on 11 of the 18 factors compared between the two stocks.

About Lincoln Electric

Lincoln Electric Holdings, Inc., through its subsidiaries, designs, develops, manufactures, and sells welding, cutting, and brazing products worldwide. The company operates through three segments: Americas Welding, International Welding, and The Harris Products Group. It offers brazing and soldering filler metals, arc welding equipment, plasma and oxyfuel cutting systems, wire feeding systems, fume control equipment, welding accessories, and specialty gas regulators, and education solutions, as well as a portfolio of automated solutions for joining, cutting, material handling, module assembly, and end of line testing, as well as involved in brazing and soldering alloys, and in the retail business in the United States. In addition, the company manufactures copper and aluminum headers, distributor assemblies, and manifolds for the heating, ventilation, and air conditioning sector in the United States and Mexico; provides specialty welding consumables, wear plates and maintenance and repair services for alloy and wear-resistant products used in mining, steel, agricultural, and industrial mill applications; and designs and manufactures robotic assembly and arc welding systems that automate the tacking and welding of steel beams. Further, the company serves general fabrication, oil and gas, power generation, process, automotive and transportation, and construction and infrastructure industries, as well as heavy fabrication, ship building, and maintenance and repair markets. It sells its products directly to users of welding products, as well as through industrial distributors, retailers, and agents. The company was founded in 1895 and is headquartered in Cleveland, Ohio.

About Sandvik

Sandvik AB (publ), an engineering company, provides products and solutions for mining and rock excavation, metal cutting, and materials technology worldwide. The company offers mining and rock excavation equipment, including drill rigs and bolters, underground loaders and trucks, mechanical cutting equipment, rock tools and rock drills, and mining automation; rock processing equipment, such as crushers, screens, hydraulic breakers, demolition tools, and breaker booms. It also provides metal-cutting tools and tooling systems, and digital solutions and software; metal powder for additive manufacturing, and components made from controlled expansion alloys; and tungsten powders, as well as recycling services of secondary tungsten raw materials. The company serves aerospace, automotive, energy, general engineering, infrastructure, and mining industries. Sandvik AB (publ) was founded in 1862 and is headquartered in Stockholm, Sweden.