ESAB Corp (NYSE: ESAB)

Sector: Industrials Industry: Metal Fabrication CIK: 0001877322
Market Cap 8.11 Bn
P/B 4.58
P/E 30.60
P/S 2.96
ROIC (Qtr) 10.29
Div Yield % 0.30
Rev 1y % (Qtr) 8.11
Total Debt (Qtr) 1.34 Bn
Debt/Equity (Qtr) 0.63
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About

ESAB Corporation, commonly known by its ticker symbol ESAB, is a prominent player in the industrial equipment and services industry. The company specializes in providing welding and cutting solutions, with a diverse customer base that includes manufacturers, construction companies, and oil and gas operators. ESAB's primary business activities revolve around the industrial equipment and services industry, specifically focusing on welding and cutting solutions. The company operates in various markets, including construction, manufacturing, and oil...

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Investment thesis

Bull case

  • Healthy cash reserves of 218.22M provide 100.33x coverage of short-term debt 2.17M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 290.39M provides strong 16.27x coverage of stock compensation 17.85M, indicating sustainable incentive practices.
  • Operating cash flow of 290.39M provides exceptional 44.19x coverage of minority interest expenses 6.57M, showing strong core operations.
  • Robust free cash flow of 243.11M exceeds capital expenditure of 47.28M by 5.14x, indicating strong organic growth funding capability.
  • Cash position of 218.22M provides exceptional 33.20x coverage of minority interest expenses 6.57M, indicating strong liquidity.

Bear case

  • Operating cash flow of 290.39M barely covers its investment activities of (553.53M), with a coverage ratio of -0.52, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 290.39M provides thin coverage of dividend payments of (20.68M) with a -14.04 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 218.22M provide limited coverage of acquisition spending of (506.80M), which is -0.43x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 290.39M barely covers operating expenses of (264000) with a -1099.96 ratio, suggesting thin operational efficiency margins and limited flexibility.
  • Retained earnings of 769.23M provide limited buffer against comprehensive income items of (554.21M), which is -1.39x, indicating elevated exposure to market risks.

Peer comparison

Companies in the Metal Fabrication
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ATI Ati Inc 20.40 Bn 45.86 4.45 1.91 Bn
2 CRS Carpenter Technology Corp 18.78 Bn 45.38 6.49 0.69 Bn
3 MLI Mueller Industries Inc 13.25 Bn 20.13 3.33 0.03 Bn
4 ESAB ESAB Corp 8.11 Bn 30.60 2.96 1.34 Bn
5 WOR Worthington Enterprises, Inc. 4.07 Bn 25.93 1.54 0.35 Bn
6 PRLB Proto Labs Inc 1.57 Bn 106.06 3.04 0.00 Bn
7 RYI Ryerson Holding Corp 0.89 Bn 7.72 0.16 0.86 Bn
8 IIIN Insteel Industries Inc 0.72 Bn 15.23 1.07 0.00 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.83 1.76
EV to Cash from Ops. EV/CFO 25.13 24.33
EV to Debt EV to Debt 6.68 75.42
EV to EBIT EV/EBIT 21.94 12.80
EV to EBITDA EV/EBITDA 17.37 -130.25
EV to Free Cash Flow [EV/FCF] EV/FCF 29.05 70.90
EV to Market Cap EV to Market Cap 1.10 0.24
EV to Revenue EV/Rev 3.26 1.91
Price to Book Value [P/B] P/B 4.58 3.80
Price to Earnings [P/E] P/E 30.60 22.15
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 11.74 2.28
Dividend Payout Ratio % Div Payout % (Qtr) 9.00 40.29
Dividend per Basic Share Div per Share (Qtr) 0.36 0.30
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 8.99 265.01
Interest Coverage Int. cover (Qtr) 5.22 618.70
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -8.68 29.14
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -13.98 42.29
Dividend Growth (1y) % Div 1y % (Qtr) 28.57 0.66
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -6.42 -10.15
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 5.87 118.55
EBIT Growth (1y) % EBIT 1y % (Qtr) -2.77 -10.94
EBT Growth (1y) % EBT 1y % (Qtr) -3.45 -12.52
EPS Growth (1y) % EPS 1y % (Qtr) -7.44 -38.14
FCF Growth (1y) % FCF 1y % (Qtr) -20.92 28.40
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 1.45 17.54
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.57 0.97
Cash Payout Ratio Cash Payout (Qtr) 0.06 0.08
Cash Ratio Cash Ratio (Qtr) 0.33 0.67
Current Ratio Curr Ratio (Qtr) 1.99 2.58
Debt to Equity Ratio Debt/Equity (Qtr) 0.63 0.60
Interest Cover Ratio Int Coverage (Qtr) 5.22 618.70
Times Interest Earned Times Interest Earned (Qtr) 5.22 618.70
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 17.00 6.15
EBIT Margin % EBIT Margin % (Qtr) 14.27 2.67
EBT Margin % EBT Margin % (Qtr) 11.54 1.83
Gross Margin % Gross Margin % (Qtr) 37.60 26.31
Net Profit Margin % Net Margin % (Qtr) 8.70 0.14