Contrasting Kubota (OTCMKTS:KUBTY) and Lincoln Electric (NASDAQ:LECO)

Lincoln Electric (NASDAQ:LECO) and Kubota (OTCMKTS:KUBTY) are both large-cap industrials companies, but which is the superior business? We will contrast the two businesses based on the strength of their profitability, dividends, institutional ownership, risk, valuation, earnings and analyst recommendations.

Insider & Institutional Ownership

79.6% of Lincoln Electric shares are held by institutional investors. Comparatively, 0.4% of Kubota shares are held by institutional investors. 1.7% of Lincoln Electric shares are held by company insiders. Comparatively, 0.0% of Kubota shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Lincoln Electric and Kubota”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lincoln Electric	$4.23 billion	3.31	$520.53 million	$10.01	25.67
Kubota	$20.19 billion	0.94	$1.25 billion	$7.59	10.94

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

Dividends

Lincoln Electric pays an annual dividend of $3.16 per share and has a dividend yield of 1.2%. Kubota pays an annual dividend of $1.19 per share and has a dividend yield of 1.4%. Lincoln Electric pays out 31.6% of its earnings in the form of a dividend. Kubota pays out 15.7% 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. Kubota is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

Lincoln Electric has a beta of 1.21, indicating that its share price is 21% more volatile than the S&P 500. Comparatively, Kubota has a beta of 1, indicating that its share price has a similar volatility profile to the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Lincoln Electric and Kubota, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lincoln Electric	0	4	5	1	2.70
Kubota	2	1	0	1	2.00

Lincoln Electric presently has a consensus target price of $306.78, indicating a potential upside of 19.38%. Given Lincoln Electric’s stronger consensus rating and higher probable upside, research analysts plainly believe Lincoln Electric is more favorable than Kubota.

Profitability

This table compares Lincoln Electric and Kubota’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%
Kubota	8.18%	9.12%	4.27%

Summary

Lincoln Electric beats Kubota on 13 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 Kubota

Kubota Corporation manufactures and sells agricultural and construction machinery in Japan, North America, Europe, Asia, and internationally. It operates through three segments: Farm & Machinery, Water & Environment, and Others. The Farm & Machinery segment offers tractors, power tillers, combine harvesters, rice transplanters, turf equipment, utility vehicles, other agricultural machinery, implements, attachments, post-harvest machinery, vegetable production equipment, intermediate management machine, and other equipment; cooperative drying, rice seedling, and gardening facilities; scales, weighing and measuring control systems, and air purifier; engines for farm equipment, construction machinery, industrial machinery, and generators; and mini excavators, wheel and skid steer loaders, compact track loaders, and other construction machinery related products. Its Water & Environment segment provides ductile iron pipes, synthetic pipes, valves, and single stack drain fittings, as well as design and construction services; reformer and cracking tubes, hearth rolls, TXAX materials, and spiral steel pipes; air-conditioning equipment; wastewater treatment equipment and plants, pumps and pump plants, membrane solutions, wastewater purification plants, night-soil treatment plants, waste incinerating and meltingplants, waste shredding and sorting plants, flue gas desulfurization apparatus, membrane methane fermentation plants, wastewater treatment plant, and valves. The Others segment offers logistics services; and roofing and exterior wall materials. It also engages in the underwriting of non-life insurance, retail financing, finance leasing, maintenance, security guarding, and facility management services; and import and export of components for farm equipment, engines, and construction machinery. It serves customers through a network of dealers. Kubota Corporation was founded in 1890 and is headquartered in Osaka, Japan.