ESAB Corporation (ESAB) AI Stock Analysis

• Market Cap: $6.86B
• Dividend Yield: 0.27%
• Average Volume (3M): 421.21K
• Price to Earnings (P/E): 26.2
• Beta (1Y): 1.34
• Revenue Growth: -1.22%
• EPS Growth: 28.46%
• Country: US
• Employees: 8,000
• Sector: Industrials
• Sector Strength: 70
• Industry: Manufacturing - Metal Fabrication
• EPS (TTM): 4.34
• Shares Outstanding: 60,622,272
• 10 Day Avg. Volume: 494,825
• 30 Day Avg. Volume: 421,212
• PEG Ratio: 0.92
• Price to Book (P/B): N/A
• Price to Sales (P/S): 2.63
• Price to Cash Flow (P/CF): 14.20
• P/FCF Ratio: 17.60
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $136.33
• Price Target Upside: 18.22% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7

ESAB's overall stock score of 76 reflects a strong financial performance and positive earnings outlook, supported by strategic initiatives and acquisitions. Technical analysis indicates mixed momentum, and the stock's valuation appears high, which may limit appeal to value-oriented investors. Overall, ESAB shows resilience and potential for future growth, tempered by valuation concerns.

Positive Factors

Earnings

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.

Financial Performance

ESAB Corporation has shown strong operating performance and margin expansion despite a challenging market environment.

Market Expansion

New product introductions and unique exposure to emerging markets and the gas control business are contributing to the company's performance.

Negative Factors

Peer Comparison

ESAB remains at over a 2x discount to ITW and is in line with larger peer LECO which has de-rated in recent months.

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 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 demonstrates solid financial health across its income statement, balance sheet, and cash flow metrics. The company has achieved consistent revenue growth and improved profitability margins, supported by a balanced and stable financial structure. While there are minor fluctuations in revenue and investment cash flows, the overall financial position remains strong, with effective leverage management and robust cash generation capabilities.

Income Statement

ESAB Corporation shows a consistent revenue growth trajectory over the years, with a moderate gross profit margin averaging around 37.8% for 2024. The net profit margin has improved, reaching 9.67% in 2024, indicating effective cost management and profitability enhancement. The EBIT and EBITDA margins are strong at approximately 16.3% for 2024, highlighting operational efficiency. However, the slight decline in revenue from 2023 to 2024 suggests potential market challenges.

Balance Sheet

The company's balance sheet reflects a stable financial position with a debt-to-equity ratio of 0.61 in 2024, showcasing a balanced leverage. The equity ratio is healthy at approximately 43.8%, indicating robust asset backing by equity. Return on Equity (ROE) improved to 14.97%, which signifies effective use of equity to generate profits. Nonetheless, the increase in total debt over the years suggests a cautious approach to leverage is needed to maintain financial stability.

Cash Flow

ESAB's cash flow is strong with a positive free cash flow trajectory, growing by 7.55% from 2023 to 2024. The operating cash flow to net income ratio is 1.34, indicating efficient cash generation relative to reported profits. The free cash flow to net income ratio of 1.15 further underscores the company's capability to generate cash beyond its net earnings. However, fluctuations in investing cash flow warrant attention to maintain liquidity and investment efficiency.

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

• Technical Analysis Sentiment: Neutral
• Last Price: 115.32
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

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 115.32 is below the 20-day moving average (MA) of 117.02, below the 50-day MA of 120.43, and above the 200-day MA of 113.23, indicating a neutral trend. The MACD of -0.94 indicates Positive momentum. The RSI at 50.18 is Neutral, neither overbought nor oversold. The STOCH value of 40.20 is Neutral, 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
ESAB	76 Outperform	$6.86B	26.23	16.99%	0.27%	-1.22%	28.46%
CRS	75 Outperform	$8.38B	31.66	16.82%	0.47%	5.65%	84.17%
ATI	70 Outperform	$6.54B	18.30	22.82%	―	4.51%	-2.90%
AZZ	68 Neutral	$2.42B	76.61	12.97%	0.84%	5.63%	-48.03%
MLI	68 Neutral	$8.04B	13.68	23.67%	1.17%	10.19%	0.35%
WOR	66 Neutral	$2.32B	38.94	6.56%	1.44%	-69.82%	-78.10%
Sector *	62 Neutral	$7.50B	12.89	3.19%	3.38%	3.64%	-14.27%