Stanley Black & Decker (NYSE:SWK) versus Lincoln Electric (NASDAQ:LECO) Head to Head Review

Stanley Black & Decker (NYSE:SWK) and Lincoln Electric (NASDAQ:LECO) are both large-cap industrials companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, profitability, risk, earnings, analyst recommendations, institutional ownership and valuation.

Institutional & Insider Ownership

87.8% of Stanley Black & Decker shares are held by institutional investors. Comparatively, 79.6% of Lincoln Electric shares are held by institutional investors. 0.7% of Stanley Black & Decker shares are held by company insiders. Comparatively, 2.4% of Lincoln Electric shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Dividends

Stanley Black & Decker pays an annual dividend of $3.28 per share and has a dividend yield of 4.8%. Lincoln Electric pays an annual dividend of $3.00 per share and has a dividend yield of 1.2%. Stanley Black & Decker pays out 104.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Lincoln Electric pays out 33.7% of its earnings in the form of a dividend. Stanley Black & Decker has raised its dividend for 58 consecutive years and Lincoln Electric has raised its dividend for 30 consecutive years. Stanley Black & Decker is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Stanley Black & Decker and Lincoln Electric’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Stanley Black & Decker	3.15%	7.76%	3.08%
Lincoln Electric	12.27%	39.79%	14.74%

Earnings and Valuation

This table compares Stanley Black & Decker and Lincoln Electric”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Stanley Black & Decker	$15.37 billion	0.68	$286.30 million	$3.15	21.58
Lincoln Electric	$4.01 billion	3.36	$466.11 million	$8.90	27.40

Lincoln Electric has lower revenue, but higher earnings than Stanley Black & Decker. Stanley Black & Decker 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 current ratings and recommmendations for Stanley Black & Decker and Lincoln Electric, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Stanley Black & Decker	1	5	5	0	2.36
Lincoln Electric	1	1	3	0	2.40

Stanley Black & Decker presently has a consensus target price of $91.10, indicating a potential upside of 33.99%. Lincoln Electric has a consensus target price of $231.40, indicating a potential downside of 5.10%. Given Stanley Black & Decker’s higher possible upside, analysts plainly believe Stanley Black & Decker is more favorable than Lincoln Electric.

Volatility and Risk

Stanley Black & Decker has a beta of 1.16, suggesting that its share price is 16% more volatile than the S&P 500. Comparatively, Lincoln Electric has a beta of 1.21, suggesting that its share price is 21% more volatile than the S&P 500.

Summary

Lincoln Electric beats Stanley Black & Decker on 11 of the 17 factors compared between the two stocks.

About Stanley Black & Decker

Stanley Black & Decker, Inc. engages in the provision of power and hand tools, and related accessories, products, services and equipment for oil and gas, infrastructure applications, commercial electronic security and monitoring systems, healthcare solutions, and mechanical access solutions. It operates through the Tools and Outdoor and Industrial segments. The Tools and Outdoor segment refers to power tools, hand tools, accessories and storage, and outdoor power equipment product lines. The Industrial segment includes the engineered fastening and infrastructure businesses. The company was founded by Frederick T. Stanley in 1843 and is headquartered in New Britain, CT.

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.