Comparing Timken (NYSE:TKR) and Lincoln Electric (NASDAQ:LECO)

Lincoln Electric (NASDAQ:LECO) and Timken (NYSE:TKR) are both industrials companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, earnings, analyst recommendations, valuation, profitability, dividends and risk.

Institutional & Insider Ownership

79.6% of Lincoln Electric shares are held by institutional investors. Comparatively, 89.1% of Timken shares are held by institutional investors. 1.7% of Lincoln Electric shares are held by insiders. Comparatively, 8.1% of Timken shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Risk and Volatility

Lincoln Electric has a beta of 1.21, meaning that its share price is 21% more volatile than the S&P 500. Comparatively, Timken has a beta of 1.18, meaning that its share price is 18% more volatile than the S&P 500.

Earnings & Valuation

This table compares Lincoln Electric and Timken”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	$4.23 billion	3.47	$520.53 million	$10.01	26.91
Timken	$4.58 billion	1.80	$288.40 million	$3.69	32.26

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

Analyst Ratings

This is a summary of current ratings for Lincoln Electric and Timken, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lincoln Electric	0	4	5	1	2.70
Timken	0	3	7	0	2.70

Lincoln Electric currently has a consensus price target of $307.22, suggesting a potential upside of 14.04%. Timken has a consensus price target of $147.00, suggesting a potential upside of 23.47%. Given Timken’s higher possible upside, analysts plainly believe Timken is more favorable than Lincoln Electric.

Dividends

Lincoln Electric pays an annual dividend of $3.16 per share and has a dividend yield of 1.2%. Timken pays an annual dividend of $1.44 per share and has a dividend yield of 1.2%. Lincoln Electric pays out 31.6% of its earnings in the form of a dividend. Timken pays out 39.0% 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 and Timken has raised its dividend for 12 consecutive years.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Lincoln Electric	12.35%	39.23%	15.25%
Timken	5.43%	12.63%	6.21%

Summary

Lincoln Electric beats Timken on 10 of the 17 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 Timken

The Timken Company designs, manufactures, and sells engineered bearings and industrial motion products, and related services in the United States and internationally. The company's Engineered Bearings segment provides various bearing products, including tapered, spherical, and cylindrical roller bearings; plain bearings, metal-polymer bearings, and rod end bearings; radial, angular, and precision ball bearings; thrust and specialty ball bearings; journal bearings; and housed or mounted bearings. This segment serves wind energy, agriculture, construction, food and beverage, metals and mining, automotive and truck, aerospace, rail, and other industries under the Timken, GGB, and Fafnir brands. Its Industrial Motion segment offers a portfolio of engineered products comprising industrial drives, automatic lubrication systems, linear motion products and systems, chains, belts, seals, couplings, filtration systems, and industrial clutches and brakes. It also provides industrial drivetrain and bearing repairing services. This segment serves a range of industries, such as solar energy, automation, construction, agriculture and turf, passenger rail, marine, aerospace, packaging and logistics, medical, and others under the Philadelphia Gear, Cone Drive, Rollon, Nadella, Groeneveld, BEKA, Diamond, Drives, Timken Belts, Spinea, Des-Case, Lagersmit, Lovejoy, and PT Tech brands. The Timken Company was founded in 1899 and is headquartered in North Canton, Ohio.