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ESAB Corporation (ESAB)
NYSE:ESAB
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ESAB Corporation
(NYSE:ESAB)
80Outperform
Positive Factors
Financial Performance
ESAB outperformed expectations with EBITDA 5% ahead of consensus while revenue was 2% ahead, and raised the low end of outlook, bringing guidance up ~1% at the midpoint.
Growth Strategy
With low leveraging and FCF to spare, ESAB is able to utilize its aggressive balance sheet to support growth at a time when peers are struggling to maintain performance.
Negative Factors
Competitive Positioning
ESAB remains at over a 2x discount to ITW and is in line with larger peer LECO which has de-rated in recent months.
Market Challenges
ESAB's strong demand in India, other parts of Asia, and the Middle East is offsetting softness in Europe.
ESAB Corporation (ESAB) vs. S&P 500 (SPY)
Market Cap
$7.17B
Dividend Yield0.25%
Average Volume (3M)357.07K
Price to Earnings (P/E)27.4
Beta (1Y)1.34
Revenue Growth-1.22%
EPS Growth28.46%
CountryUS
Employees8,000
SectorIndustrials
Sector Strength78
IndustryManufacturing - Metal Fabrication
Share Statistics
EPS (TTM)4.34
Shares Outstanding60,622,272
10 Day Avg. Volume271,889
30 Day Avg. Volume357,075
Financial Highlights & Ratios
PEG Ratio0.96
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap1.15
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit7.92
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$135.14Price Target Upside9.19% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
ESAB Corporation Business Overview & Revenue Model
Company DescriptionESAB 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 MoneyESAB Corporation generates revenue primarily through the sale of its welding and cutting equipment and consumables. The company's key revenue streams include the manufacturing and distribution of welding consumables such as electrodes, wires, and fluxes, as well as welding and cutting equipment like machines, torches, and accessories. ESAB also offers automation solutions that enhance productivity and efficiency for industrial clients. Significant partnerships with distributors and suppliers, as well as a strong global presence, contribute to ESAB's earnings by facilitating access to diverse markets and customer bases.
ESAB Corporation Financial Statement Overview
Summary
ESAB Corporation presents a robust financial profile with strong profitability margins and solid equity positioning. While the revenue and free cash flow growth rates show minor declines, the company's efficient cash flow generation and favorable leverage ratios bolster overall financial stability. Continued focus on revenue growth and cash flow management will be key to sustaining long-term financial health.Income Statement
ESAB Corporation demonstrates strong profitability with its TTM (Trailing-Twelve-Months) gross profit margin of 37.75% and net profit margin of 9.98%. The EBIT and EBITDA margins are also healthy at 16.54% and 16.98%, respectively. However, revenue growth is slightly negative at -0.42% compared to the previous year, indicating a potential area of concern for future growth.80
Positive
Balance Sheet
The company maintains a solid equity position with a debt-to-equity ratio of 0.56 and an equity ratio of 45.28%. Return on equity (ROE) is robust at 14.26%, reflecting efficient use of equity capital. Despite slight fluctuations in debt levels, the overall financial stability remains satisfactory.75
Positive
Cash Flow
Operating cash flow remains strong with a TTM free cash flow to net income ratio of 1.08, showcasing efficient cash generation relative to net income. The operating cash flow to net income ratio is 1.27, indicating strong cash flow coverage. Free cash flow growth, however, is slightly negative at -2.94%, suggesting a need for improved cash flow management.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.74B | 2.77B | 2.59B | 2.43B | 1.95B | Gross Profit |
| 1.04B | 1.02B | 885.53M | 837.98M | 682.47M | EBIT |
| 447.45M | 404.17M | 329.06M | 306.21M | 202.13M | EBITDA |
| 502.08M | 465.14M | 418.14M | 393.69M | 299.25M | Net Income Common Stockholders |
| 264.84M | 203.73M | 223.75M | 235.11M | 157.41M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 249.36M | 102.00M | 72.02M | 41.21M | 49.21M | Total Assets |
| 4.03B | 3.83B | 3.75B | 3.46B | 3.39B | Total Debt |
| 1.16B | 1.12B | 1.24B | 109.24M | 97.04M | Net Debt |
| 913.88M | 1.02B | 1.17B | 68.03M | 47.83M | Total Liabilities |
| 2.23B | 2.18B | 2.37B | 959.53M | 841.06M | Stockholders Equity |
| 1.77B | 1.61B | 1.35B | 2.46B | 2.50B |
| Cash Flow | Free Cash Flow | |||
| 303.62M | 282.32M | 174.12M | 215.15M | 269.04M | Operating Cash Flow |
| 355.40M | 330.49M | 214.36M | 250.74M | 309.18M | Investing Cash Flow |
| -205.70M | -62.24M | -184.42M | -35.27M | -34.57M | Financing Cash Flow |
| 31.67M | -219.72M | 7.56M | -221.57M | -326.42M |
ESAB Corporation Technical Analysis
Positive
123.77
Price Trends
118.39
Positive
120.79
Positive
114.78
Positive
Market Momentum
0.83
Negative
59.38
Neutral
77.52
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ESAB, the sentiment is Positive. The current price of 123.77 is above the 20-day moving average (MA) of 114.95, above the 50-day MA of 118.39, and above the 200-day MA of 114.78, indicating a bullish trend. The MACD of 0.83 indicates Negative momentum. The RSI at 59.38 is Neutral, neither overbought nor oversold. The STOCH value of 77.52 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ESAB.
ESAB Corporation Risk Analysis
ESAB Corporation disclosed 36 risk factors in its most recent earnings report. ESAB Corporation reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
ESAB Corporation Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $8.54B | 32.25 | 21.78% | 0.40% | 7.40% | 168.67% | |
80 Outperform | $7.17B | 27.42 | 16.99% | 0.25% | -1.22% | 28.46% | |
76 Outperform | $9.39B | 24.08 | 25.42% | ― | 6.82% | 3.49% | |
75 Outperform | $8.36B | 13.77 | 24.51% | 1.16% | 18.81% | 10.05% | |
70 Outperform | $2.71B | 50.62 | 13.01% | 0.78% | 2.61% | -53.74% | |
66 Neutral | $2.60B | 43.48 | 6.56% | 1.31% | -69.82% | -78.10% | |
64 Neutral | $4.28B | 11.80 | 5.30% | 250.74% | 4.12% | -9.02% |
* Industrials Sector Average
Performance Comparison
ESAB
ESAB Corporation
123.77
16.50
15.38%
ATI
ATI
66.57
7.49
12.68%
AZZ
AZZ
90.46
15.71
21.02%
CRS
Carpenter Technology
213.01
111.59
110.03%
MLI
Mueller Industries
75.55
18.26
31.87%
WOR
Worthington Industries
51.99
-7.25
-12.24%
ESAB Corporation Earnings Call Summary
Earnings Call Date:May 01, 2025
(Q1-2025)
| % Change Since: 3.04%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong performance in margins, successful acquisitions, and positive growth in certain international markets. However, challenges remain in the Americas with organic sales decline and the impact of tariffs, leading to a balanced outlook.Q1-2025 Updates
Positive Updates
Record Adjusted EBITDA Margin
Achieved a record first quarter adjusted EBITDA margin of 19.8%, with 100 basis points of margin expansion on slightly positive organic growth.
Successful Acquisition of Bavaria
Completed the acquisition of Bavaria, enhancing the proprietary consumables portfolio and positioning ESAB to gain share in faster-growing end segments.
Strong Performance in EMEA and APAC
Total sales rose by 200 basis points in EMEA and APAC regions with adjusted EBITDA margins of 20%. Volume increased by 400 basis points.
Gas Control Business Growth
Gas control business grew from 10% to 18% of total revenue, with a target of reaching 25% by 2028. This segment is highly profitable with gross margins in the mid-40s.
Positive Outlook in Europe and India
Optimism in European and Indian markets due to stimulus and investment plans, especially in Germany, which signal significant upside potential.
Negative Updates
Organic Sales Decline in Americas
Americas experienced a 200 basis point decline in organic sales due to lower volumes, though this was offset by strong price performance.
Impact of Tariffs
Tariffs expected to impact North America by $15 million to $20 million, though price increases have been implemented to offset this.
Challenges in North American Market
The North American market experienced a lull due to tariff uncertainties, causing customers and channels to delay purchases.
Company Guidance
During the ESAB First Quarter 2025 Earnings Release and Conference Call, the company provided a robust financial outlook for the year, highlighting several key metrics. ESAB reported a record first quarter adjusted EBITDA margin of 19.8%, driven by 100 basis points of margin expansion and slightly positive organic growth. The global welding equipment and gas control equipment businesses experienced mid-single-digit growth, contributing to this success. ESAB also announced the completion of the Bavaria acquisition, which is expected to be EPS neutral in its first year but offers significant margin expansion potential. The full-year adjusted EBITDA guidance was increased to $520 million to $530 million, reflecting the Bavaria acquisition and improved FX conditions. The company anticipates low to mid-single-digit organic growth in EMEA and APAC, offset by negative growth in the Americas. Additionally, ESAB expects to close two more tuck-in gas control acquisitions by the end of Q2, further enhancing its growth trajectory. The 2025 revenue assumptions were raised by approximately $30 million, with $20 million attributed to the Bavaria acquisition. Despite tariff impacts estimated at $15 million to $20 million, ESAB plans to offset these with strategic price increases, particularly in North America. Overall, ESAB remains confident in its 2025 outlook, supported by strategic investments, strong cash flow, and a robust acquisition pipeline.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.