Reviewing SPX (SPXC) & Lincoln Electric (LECO)

SPX (NYSE: SPXC) and Lincoln Electric (NASDAQ:LECO) are both auto/tires/trucks companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, valuation, earnings, dividends, institutional ownership, profitability and analyst recommendations.

Analyst Recommendations

This is a breakdown of current ratings for SPX and Lincoln Electric, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SPX 0 1 1 0 2.50
Lincoln Electric 0 3 8 0 2.73

SPX currently has a consensus price target of $36.50, suggesting a potential upside of 14.78%. Lincoln Electric has a consensus price target of $103.67, suggesting a potential upside of 22.28%. Given Lincoln Electric’s stronger consensus rating and higher probable upside, analysts plainly believe Lincoln Electric is more favorable than SPX.

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SPX $1.43 billion 0.95 $89.30 million $1.78 17.87
Lincoln Electric $2.62 billion 2.12 $247.50 million $3.79 22.37

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

Insider and Institutional Ownership

87.9% of SPX shares are owned by institutional investors. Comparatively, 66.9% of Lincoln Electric shares are owned by institutional investors. 1.6% of SPX shares are owned by insiders. Comparatively, 3.3% of Lincoln Electric shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Dividends

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

Profitability

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

Net Margins Return on Equity Return on Assets
SPX 6.26% 31.70% 4.02%
Lincoln Electric 9.01% 29.39% 11.56%

Volatility and Risk

SPX has a beta of 1.54, suggesting that its stock price is 54% more volatile than the S&P 500. Comparatively, Lincoln Electric has a beta of 1.1, suggesting that its stock price is 10% more volatile than the S&P 500.

Summary

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

About SPX

SPX Corporation supplies infrastructure equipment serving the heating and ventilation (HVAC), detection and measurement, power transmission and generation, and industrial markets in the United States, China, South Africa, the United Kingdom, and internationally. It operates through three segments: HVAC, Detection and Measurement, and Engineered Solutions. The HVAC segment engineers, designs, manufactures, installs, and services cooling products for the HVAC and industrial markets, as well as boilers, comfort heating, and ventilation products for the residential and commercial markets. The Detection and Measurement segment offers underground pipe and cable locators, and inspection equipment, as well as bus fare collection systems, communication technologies, and specialty lighting products. The Engineered Solutions segment provides transformers for the power transmission and distribution markets; and process cooling equipment, as well as rotating and stationary heat exchangers for the industrial and power generation markets. This segment sells transformers for publicly and privately held utilities under the Waukesha brand name; and process cooling products and heat exchangers under the brand names of the SPX Cooling, Marley, Yuba, and Ecolaire. The company markets its products through various distribution channels, such as direct to customers, independent manufacturing representatives, third-party distributors, and retailers. SPX Corporation is headquartered in Charlotte, North Carolina.

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.

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