ESAB Corporation (ESAB) AI Stock Analysis

• Market Cap: $7.61B
• Dividend Yield: 0.33%
• Average Volume (3M): 448.33K
• Price to Earnings (P/E): 34.0
• Beta (1Y): 1.04
• Revenue Growth: 1.19%
• EPS Growth: -7.78%
• Country: US
• Employees: 8,000
• Sector: Industrials
• Sector Strength: 72
• Industry: Manufacturing - Metal Fabrication
• EPS (TTM): N/A
• Shares Outstanding: 60,728,710
• 10 Day Avg. Volume: 482,484
• 30 Day Avg. Volume: 448,335
• PEG Ratio: -2.05
• Price to Book (P/B): 3.14
• Price to Sales (P/S): 2.40
• P/FCF Ratio: 31.92
• Enterprise Value/Market Cap: 1.16
• Enterprise Value/Revenue: 3.10
• Enterprise Value/Gross Profit: 8.74
• Enterprise Value/Ebitda: 17.74
• 1Y Price Target: $151.00
• Price Target Upside: 21.01% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 5
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 71 Outperform
• Price Target: $144.00 ▲(15.40% Upside)
• Action: Reiterated Date: 02/20/26
• Date: Action: Reiterated 02/20/26

The score is driven by solid core profitability and supportive technical momentum, reinforced by raised guidance and a positive outlook. Offsetting factors are a premium valuation and recent weakening in TTM cash flow versus 2024, plus added execution/financing risk around the large Eddyfi acquisition.

Positive Factors

Recurring consumables & aftermarket

ESAB’s business model derives significant recurring revenue from consumables and aftermarket parts, creating steady, repeatable demand tied to customer production. This leads to durable cash flow visibility, higher customer retention, and margin stability versus one-off equipment sales.

Strong margins and operating profitability

ESAB reports mid-30s gross margins and healthy operating margins, reflecting product mix and cost structure advantages. Sustained margin levels support free cash flow generation and reinvestment capacity, underpinning long-term resilience across cycles in industrial end markets.

Strategic M&A expands higher-margin exposure

The Eddyfi acquisition broadens ESAB’s footprint into non-destructive testing and monitoring for aerospace, defense and energy — markets that are less cyclical and command higher margins. If integrated successfully, this diversifies revenue mix and raises long-term growth and margin potential.

Negative Factors

Acquisition financing & leverage risk

The $1.45B Eddyfi purchase, funded with a $1.0B bridge loan plus equity and preferred issuance, transiently elevates leverage and execution risk. Increased debt and complex financing raise refinancing and integration risks that can constrain capital allocation and credit flexibility for months.

Weaker cash flow conversion recently

TTM operating and free cash flow declined materially versus 2024, reducing cash conversion of earnings. If this weaker cash conversion persists, it will limit capacity to delever post-acquisition, fund organic investments, and sustain shareholder returns without increasing leverage.

Cooling returns on equity

ROE and net income have softened year-over-year, indicating pressure on capital efficiency. Lower returns reduce internal funding ability and increase reliance on external financing for growth initiatives, making disciplined capital allocation more critical during integration and restructuring.

ESAB Corporation Business Overview & Revenue Model

Company Description

ESAB Corporation formulates, develops, manufactures, and supplies consumable products and equipment for use in cutting, joining, and automated welding, as well as gas control equipment. Its comprehensive range of welding consumables includes electrodes, cored and solid wires, and fluxes using a range of specialty and other materials; and cutting consumables, including electrodes, nozzles, shields, and tips. The company's fabrication technology equipment ranges from portable welding machines to large customized automated cutting and welding systems. It also offers a range of digital software and solutions to help its customers increase their productivity, remotely monitor their welding operations, and digitize their documentation. The company sells its products under the ESAB brand to various end markets, including general industry, construction, infrastructure, transportation, energy, renewable energy, and medical and life sciences. It offers its products through independent distributors and direct salespeople. ESAB Corporation was incorporated in 2021 and is based in Wilmington, Delaware.

How the Company Makes Money

ESAB generates revenue through multiple streams, primarily from the sale of welding consumables and equipment. The company's revenue model is built on a combination of direct sales to end-users, distribution partnerships, and service contracts. Key revenue streams include the sale of welding wires, rods, and electrodes, as well as cutting machines and automation systems. Additionally, ESAB benefits from recurring revenue through maintenance services and parts replacement. Strategic partnerships with distributors and collaborations with industry leaders further enhance its market reach and contribute to its earnings. The company also invests in research and development to innovate and expand its product offerings, which helps to drive sales growth and maintain competitive advantage in the market.

ESAB Corporation Financial Statement Overview

Summary

Profitable, steady industrial profile with strong gross/EBIT margins, but recent step-down in net income and weaker TTM operating/free cash flow versus 2024 temper the financial quality.

Income Statement

ESAB shows solid profitability with stable-to-improving gross margin (mid-30%s, reaching ~37.6% in TTM (Trailing-Twelve-Months)) and healthy operating profitability (EBIT margin ~16% in TTM). Net margin remains good (~8.7% TTM) but is down versus 2024 (~9.7%), and earnings softened in TTM (net income ~$227M vs ~$265M in 2024). Growth is modest: revenue is up ~1.8% in TTM after being roughly flat in 2024, indicating more of a steady compounder than a high-growth story.

Balance Sheet

Leverage is moderate and generally manageable with debt-to-equity around ~0.66–0.70 in 2023–TTM (improved from ~0.97 in 2022), supporting balance-sheet stability. Equity and assets increased in the latest period, but returns eased, with return on equity down to ~12.4% in TTM from ~15.0% in 2024. Overall, the balance sheet looks sound, though not under-levered, and profitability on equity has cooled recently.

Cash Flow

Cash generation is positive with TTM (Trailing-Twelve-Months) operating cash flow of ~$261M and free cash flow of ~$213M, and free cash flow remains a strong share of net income (about ~82% in TTM). However, cash flow weakened versus 2024 (operating cash flow ~$355M; free cash flow ~$304M), and TTM free cash flow declined (~-10.4% growth). Cash conversion also looks lighter in the latest period (operating cash flow is a lower share of reported earnings than prior years), which is a key watch item if it persists.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	2.84B	2.74B	2.77B	2.59B	2.43B
Gross Profit	1.01B	1.04B	1.02B	885.53M	837.98M
EBITDA	491.56M	531.41M	509.37M	435.40M	404.83M
Net Income	226.77M	264.84M	205.28M	223.75M	235.11M
Balance Sheet
Total Assets	4.77B	4.03B	3.83B	3.75B	3.46B
Cash, Cash Equivalents and Short-Term Investments	185.86M	249.36M	102.00M	72.02M	41.21M
Total Debt	1.43B	1.16B	1.12B	1.31B	109.24M
Total Liabilities	2.55B	2.23B	2.18B	2.37B	959.53M
Stockholders Equity	2.17B	1.77B	1.61B	1.35B	2.46B
Cash Flow
Free Cash Flow	213.28M	303.62M	282.32M	174.12M	215.15M
Operating Cash Flow	260.57M	355.40M	330.49M	214.36M	250.74M
Investing Cash Flow	-479.88M	-205.70M	-62.24M	-184.42M	-35.27M
Financing Cash Flow	113.70M	31.67M	-219.72M	7.56M	-221.57M

ESAB Corporation Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 124.78
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ESAB, the sentiment is Neutral. The current price of 124.78 is below the 20-day moving average (MA) of 127.47, above the 50-day MA of 120.97, and above the 200-day MA of 119.18, indicating a neutral trend. The MACD of 1.91 indicates Positive momentum. The RSI at 48.12 is Neutral, neither overbought nor oversold. The STOCH value of 13.67 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for ESAB.

ESAB Corporation Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AZZ	79 Outperform	$4.03B	12.68	27.38%	0.67%	1.55%	701.41%
MLI	79 Outperform	$13.33B	17.50	25.58%	0.85%	15.71%	29.60%
CRS	78 Outperform	$19.55B	45.59	23.48%	0.24%	2.40%	81.54%
ESAB	71 Outperform	$7.61B	34.04	13.86%	0.33%	1.19%	-7.78%
WOR	70 Outperform	$2.79B	26.54	11.31%	1.27%	7.43%	148.83%
ATI	69 Neutral	$22.05B	56.10	22.12%	―	7.75%	6.84%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%

ESAB Corporation Corporate Events

ESAB Announces Eddyfi Acquisition and Financing Initiatives

On January 31, 2026, ESAB Corporation agreed via a wholly owned subsidiary to acquire Québec-based Eddyfi Holding Inc. and related entities for $1.45 billion in cash, a deal that will make Eddyfi a wholly owned subsidiary and combine ESAB’s fabrication capabilities with Eddyfi’s advanced non-destructive testing, inspection, monitoring and robotics technologies. The acquisition, expected to close in mid-2026 subject to regulatory approvals in multiple jurisdictions, is structured with a $1.0 billion committed bridge loan and $318 million of equity financing and is projected to expand ESAB’s addressable market by about $5 billion, boost its exposure to higher-growth, higher-margin and less cyclical sectors such as aerospace, defense, nuclear, energy and civil infrastructure, and position the company as a full workflow provider from fabrication through inspection and monitoring. To support the financing package, on February 2, 2026 ESAB launched private placements of $175 million of 6.50% Series A Mandatory Convertible Preferred Stock—largely subscribed by entities affiliated with Chairman Mitchell Rales and Steven Rales—and approximately $143 million of common stock to institutional investors, all unregistered offerings under securities law exemptions. ESAB also released preliminary unaudited estimates for the fourth quarter and full year 2025 showing continued revenue and earnings growth, alongside an initial 2026 outlook (excluding Eddyfi) indicating further gains in core revenue, EBITDA and adjusted EPS, while guiding investors to expect a post-transaction net leverage ratio below 3.0x by year-end once the deal closes and synergies begin to materialize.

The most recent analyst rating on (ESAB) stock is a Hold with a $133.00 price target. To see the full list of analyst forecasts on ESAB Corporation stock, see the ESAB Stock Forecast page.

ESAB Corporation Appoints Dr. Sébastien Martin to Board

On December 4, 2025, ESAB Corporation announced the appointment of Dr. Sébastien Martin to its Board of Directors, effective January 1, 2026, increasing the board size to ten members. Dr. Martin, an Associate Professor at Kellogg School of Management, brings expertise in AI and operations management, which is expected to enhance ESAB’s strategic direction and operational efficiency. Concurrently, Patrick Allender announced his retirement from the board, effective after the 2026 annual meeting, marking the end of his significant contributions since ESAB’s independent listing in 2022.

The most recent analyst rating on (ESAB) stock is a Hold with a $113.00 price target. To see the full list of analyst forecasts on ESAB Corporation stock, see the ESAB Stock Forecast page.