Timken (NYSE:TKR – Get Free Report) and Lincoln Electric (NASDAQ:LECO – Get Free Report) are both industrials companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, earnings, institutional ownership, valuation, profitability and risk.
Valuation and Earnings
This table compares Timken and Lincoln Electric”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Timken | $4.58 billion | 1.78 | $288.40 million | $3.69 | 31.97 |
| Lincoln Electric | $4.23 billion | 3.45 | $520.53 million | $10.01 | 26.79 |
Analyst Recommendations
This is a breakdown of current recommendations for Timken and Lincoln Electric, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Timken | 0 | 3 | 7 | 0 | 2.70 |
| Lincoln Electric | 0 | 4 | 5 | 1 | 2.70 |
Timken presently has a consensus price target of $145.50, suggesting a potential upside of 23.34%. Lincoln Electric has a consensus price target of $307.22, suggesting a potential upside of 14.57%. Given Timken’s higher possible upside, analysts clearly believe Timken is more favorable than Lincoln Electric.
Dividends
Timken pays an annual dividend of $1.44 per share and has a dividend yield of 1.2%. Lincoln Electric pays an annual dividend of $3.16 per share and has a dividend yield of 1.2%. Timken pays out 39.0% of its earnings in the form of a dividend. Lincoln Electric pays out 31.6% 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. Timken has raised its dividend for 12 consecutive years and Lincoln Electric has raised its dividend for 30 consecutive years.
Insider & Institutional Ownership
89.1% of Timken shares are held by institutional investors. Comparatively, 79.6% of Lincoln Electric shares are held by institutional investors. 8.1% of Timken shares are held by insiders. Comparatively, 1.7% of Lincoln Electric shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Risk and Volatility
Timken has a beta of 1.21, meaning that its stock price is 21% more volatile than the S&P 500. Comparatively, Lincoln Electric has a beta of 1.21, meaning that its stock price is 21% more volatile than the S&P 500.
Profitability
This table compares Timken and Lincoln Electric’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Timken | 5.43% | 12.63% | 6.21% |
| Lincoln Electric | 12.35% | 39.23% | 15.25% |
Summary
Lincoln Electric beats Timken on 9 of the 16 factors compared between the two stocks.
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.
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.
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