Kennametal (NYSE:KMT) versus Lincoln Electric (NASDAQ:LECO) Head-To-Head Review

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

Insider & Institutional Ownership

79.6% of Lincoln Electric shares are owned by institutional investors. 1.4% of Kennametal shares are owned by insiders. Comparatively, 2.4% of Lincoln Electric shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Kennametal and Lincoln Electric”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kennametal	$2.05 billion	0.87	$109.32 million	$1.39	16.75
Lincoln Electric	$4.01 billion	2.91	$466.11 million	$8.11	25.72

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Kennametal	5.45%	9.12%	4.72%
Lincoln Electric	11.44%	39.44%	14.75%

Analyst Ratings

This is a summary of recent ratings for Kennametal and Lincoln Electric, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kennametal	1	4	0	0	1.80
Lincoln Electric	1	1	3	0	2.40

Kennametal currently has a consensus price target of $25.40, indicating a potential upside of 9.09%. Lincoln Electric has a consensus price target of $206.40, indicating a potential downside of 1.07%. Given Kennametal’s higher possible upside, equities analysts clearly believe Kennametal is more favorable than Lincoln Electric.

Volatility & Risk

Kennametal has a beta of 1.4, indicating that its share price is 40% more volatile than the S&P 500. Comparatively, Lincoln Electric has a beta of 1.2, indicating that its share price is 20% more volatile than the S&P 500.

Dividends

Kennametal pays an annual dividend of $0.80 per share and has a dividend yield of 3.4%. Lincoln Electric pays an annual dividend of $3.00 per share and has a dividend yield of 1.4%. Kennametal pays out 57.6% of its earnings in the form of a dividend. Lincoln Electric pays out 37.0% 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.

Summary

Lincoln Electric beats Kennametal on 14 of the 17 factors compared between the two stocks.

About Kennametal

Kennametal Inc. engages in development and application of tungsten carbides, ceramics, and super-hard materials and solutions for use in metal cutting and extreme wear applications to enable customers work against corrosion and high temperatures conditions worldwide. The company operates through two segments, Metal Cutting and Infrastructure. It offers standard and custom products, including turning, milling, hole making, tooling systems, and services, as well as specialized wear components and metallurgical powders for manufacturers engaged in various industries, such as the manufacturers of transportation vehicles and components, machine tools, and light and heavy machinery; airframe and aerospace components; and energy-related components for the oil and gas industry, as well as power generation. In addition, the company provides specified product design, selection, application, and support services; and standard and custom metal cutting solutions to aerospace, general engineering, energy, and transportation customers. Further, it produces compacts, nozzles, frac seats, and custom components used in oil and gas, and petrochemical industries; rod blanks and abrasive water jet nozzles for general industries; earth cutting tools and systems used in underground mining, trenching and foundation drilling, and road milling; tungsten carbide powders for the oil and gas, aerospace, and process industries; and ceramics used by the packaging industry for metallization of films and papers. The company provides its products under the Kennametal, WIDIA, WIDIA Hanita, and WIDIA GTD brands through its direct sales force; a network of independent and national distributors; integrated supplier channels; and through the Internet. The company was founded in 1938 and is based in Pittsburgh, Pennsylvania.

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.