Key takeaways
View moreLinde's current valuation appears slightly overvalued primarily due to its high EV/EBITDA ratio of 19.31 compared to the industry average of 12.84. However, this is partially offset by the company's strong profitability metrics, which are significantly above industry averages, and its robust growth prospects in high-growth markets and clean energy initiatives. The company's defensive business model and market leadership position provide additional support for its premium valuation.
- Linde's profitability metrics, including gross and net profit margins, are significantly above industry averages, driven by effective cost management and pricing strategies. For example, the net profit margin as of March 31, 2025, was 20.62% compared to an industry average of -1135.07%.
- The company faces potential liquidity concerns due to a current ratio of 0.94 as of March 31, 2025, which is below the industry average of 4.03. However, increasing cash and short-term investments provide some offset.
- Increasing long-term debt, which stood at $17.608 billion as of March 31, 2025, raises concerns about long-term solvency and financial risk, requiring close monitoring.
- Linde's disciplined capital allocation strategy, balancing investments in the business with returns to shareholders through dividends and share repurchases, supports long-term value creation. The company raised its annual dividend by 8% and repurchased $1.1 billion of stock in Q1 2025.
- Secular growth opportunities in electronics and high-growth markets like India offer potential for future revenue expansion, as highlighted in the earnings call and SEC filings.
- The company's defensive business model, as emphasized in the earnings call, provides stability and resilience in the current uncertain economic climate.
- Linde is navigating legal disputes, particularly related to its terminated projects in Russia, but has secured favorable rulings in international arbitration so far, as noted in the SEC filings.
- Management reaffirmed its full-year EPS guidance of $16.20 to $16.50, indicating confidence in the company's performance despite global trade policy uncertainties.
- Compared to peers like The Sherwin-Williams Co. (SHW) and Air Products & Chemicals, Inc. (APD), Linde has shown strong long-term performance but has been outperformed by SHW in shorter periods. Linde generally offers better risk-adjusted returns.
- The Enterprise Value to EBITDA ratio of 19.31 as of March 31, 2025, is higher than the industry average of 12.84, suggesting the company may be overvalued compared to its peers.
Evaluation summary
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Company Overview:
- Linde Plc is a global industrial gases and engineering company. It produces and distributes atmospheric gases (oxygen, nitrogen, argon, rare gases) and process gases (hydrogen, helium, carbon dioxide, carbon monoxide, electronic gases, specialty gases, acetylene).
- The company serves diverse industries, including healthcare, chemicals and energy, manufacturing, metals and mining, food and beverage, and electronics. Linde operates through three geographic segments: Americas, EMEA, and APAC, along with an Engineering segment.
- For comparative analysis, the company's performance is benchmarked against the Materials Select Sector SPDR Fund (XLB) and evaluated against industry peers such as The Sherwin-Williams Co. (SHW) and Air Products & Chemicals, Inc. (APD).
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Financial Performance:
- Linde's revenue has shown a slightly decreasing trend in recent quarters, from $8.356 billion in Q3 2024 to $8.112 billion in Q1 2025.
- Net income has fluctuated, with $1.707 billion in Q1 2025, $1.769 billion in Q4 2024, $1.603 billion in Q3 2024, and $1.700 billion in Q2 2024.
- Gross Profit Margin was 37.54% as of March 31, 2025, compared to 36.38% as of September 30, 2024, indicating improved efficiency. Net Profit Margin was 20.62% as of March 31, 2025, compared to 18.55% as of September 30, 2024.
- Return on Average Assets (ROA) was 8.11% as of March 31, 2025, Return on Average Total Equity (ROE) was 17.20%, and Return on Average Total Capital was 14.17%. These are significantly higher than the industry averages of -5.98%, -34.74%, and -1.82%, respectively, indicating strong profitability.
- According to the SEC filings, Linde's sales were flat in 2024 compared to 2023, with higher pricing offsetting volume declines and currency headwinds. Reported operating profit increased 8% in 2024, driven by higher pricing and productivity initiatives that offset cost inflation.
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Operational Efficiency:
- Total Current Assets were $13.597 billion as of March 31, 2025, while Total Current Liabilities were $14.485 billion, resulting in a negative Working Capital of -$888 million. This indicates potential liquidity concerns.
- Net Operating Cash Flow was $2.161 billion as of March 31, 2025. Total Capital Expenditure was $1.270 billion.
- Free Cash Flow to Equity was $891 million as of March 31, 2025.
- The company paid cash dividends of $708 million in Q1 2025 and repurchased $1.1 billion of stock, demonstrating a commitment to returning value to shareholders.
- The current ratio was 0.94 as of March 31, 2025, below the industry average of 4.03, indicating potential liquidity issues.
- The Debt to Equity Ratio was 62.83% as of March 31, 2025, lower than the industry average of 107.66%. Debt / EBITDA was 1.91 as of March 31, 2025, also lower than the industry average of 4.30.
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Growth Opportunities:
- Linde is focused on secular growth opportunities in electronics and high-growth markets like India, as highlighted in the earnings call.
- The company has a strong project backlog of $10 billion, with over $7 billion in sale of gas projects, underpinned by long-term contracts with secured returns, according to the earnings call.
- Linde is actively constructing two of the largest projects in its history, as mentioned in the earnings call.
- The company completed the acquisition of nexAir, LLC in 2023 to expand its geographic footprint in the U.S., as noted in the SEC filings.
- Linde sees potential opportunities in Europe due to a more pragmatic approach to decarbonization, particularly with low-carbon hydrogen projects, as mentioned in the earnings call.
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Recent Developments and Market Sentiment:
- The recent earnings call on May 1, 2025, highlighted Linde's defensive business model and management's focus on pricing and productivity initiatives.
- Management reaffirmed its full-year EPS guidance of $16.20 to $16.50, narrowing the range slightly, indicating confidence in the company's performance.
- Analysts are focused on the impact of the Dow Alberta project delay, EMEA margin performance, and clean energy opportunities, as reflected in the analysts' focus section of the earnings call.
- The SEC filings indicate that Linde is navigating legal disputes, particularly related to its terminated projects in Russia, but has secured favorable rulings in international arbitration so far.
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Risks and Threats:
- Weakening economic conditions, cost inflation, and supply chain disruptions could adversely impact Linde's financial results, as noted in the SEC filings.
- Operational risks such as production facility failures, transportation accidents, and IT system breaches could disrupt the business, according to the SEC filings.
- Regulatory changes related to climate change, environmental protection, and other areas could increase Linde's compliance costs, as mentioned in the SEC filings.
- The company faces legal and tax risks from ongoing proceedings and investigations in various jurisdictions, according to the SEC filings.
- Linde anticipates moderated growth in China and is focusing on productivity improvements to offset macro risks, as mentioned in the earnings call.
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Valuation Analysis:
- The Enterprise Value to EBITDA ratio was 19.31 as of March 31, 2025, higher than the industry average of 12.84, suggesting the company may be overvalued compared to its peers.
- The Enterprise Value to Sales ratio was 7.32 as of March 31, 2025, significantly lower than the industry average of 142.53, indicating efficient revenue generation relative to its enterprise value.
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Price Performance:
- Linde's stock price has fluctuated between $413.33 and $469.74 from March 21, 2025, to May 19, 2025.
- Linde Plc (LIN) has generally outperformed the Materials Select Sector SPDR Fund (XLB) over the analyzed periods, particularly in the 1-year, 2-year, and 3-year returns. However, in the 1-month period, LIN underperformed XLB.
- Over the past three years, LIN outperformed both The Sherwin-Williams Co. (SHW) and Air Products & Chemicals, Inc. (APD). However, over shorter periods like 1 year and 2 years, SHW significantly outperformed LIN.
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Future Outlook:
- Management reaffirmed its full-year EPS guidance of $16.20 to $16.50, indicating confidence in the company's performance.
- The company maintains a cautious outlook due to global trade policy uncertainties and anticipates volatility in end-market trends, as mentioned in the earnings call.
- Linde is focused on disciplined capital allocation, balancing investments in the business with returns to shareholders through dividends and share repurchases, as highlighted in the earnings call.
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Summary:
- Linde Plc is a global leader in industrial gases with strong profitability metrics, significantly above industry averages. However, the company faces potential liquidity concerns due to a current ratio below 1 and increasing long-term debt.
- The company's defensive business model and disciplined capital allocation strategy position it well to navigate economic uncertainty. Secular growth opportunities in electronics and high-growth markets like India offer potential for future revenue expansion.
- Key strengths include strong profitability, a defensive business model, and a disciplined capital allocation strategy. Weaknesses include potential liquidity concerns and increasing long-term debt. Opportunities include growth in electronics and high-growth markets, as well as decarbonization initiatives in Europe. Threats include weakening economic conditions, cost inflation, regulatory changes, and legal disputes.
- Linde's overall financial health is stable, but the increasing debt and liquidity concerns require close monitoring. The company's future performance depends on its ability to capitalize on growth opportunities while managing risks and maintaining operational efficiency.
- Investors should monitor the company's liquidity, debt levels, and progress on growth initiatives. The impact of global trade policy uncertainties and regulatory changes should also be closely watched.
- Linde presents a mixed investment profile. Its strong profitability and growth opportunities are attractive, but the liquidity concerns and increasing debt pose risks. The company's valuation is high compared to its peers, but its efficient revenue generation is a positive sign. Overall, Linde is a solid company with good long-term potential, but investors should be aware of the risks and monitor the company's performance closely.
Price history
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Fundamentals
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Insights
- Linde's profitability metrics are strong and significantly above industry averages, driven by effective cost management and higher margins.
- The company faces potential liquidity concerns due to a current ratio below 1, but increasing cash and short-term investments provide some offset.
- Increasing long-term debt raises concerns about long-term solvency and financial risk, requiring close monitoring.
- The company's disciplined capital allocation strategy and defensive business model position it well to navigate economic uncertainty.
- Secular growth opportunities in electronics and high-growth markets like India offer potential for future revenue expansion.
Analysis
- Revenue
- Revenue has shown a slightly decreasing trend in recent quarters, with the most recent quarter's revenue below the 8-quarter average.
- The 3-year CAGR is less than the 5-year CAGR, indicating a deceleration in revenue growth.
- The company's Enterprise Value to Sales ratio is significantly lower than the industry average, suggesting efficient revenue generation relative to its enterprise value.
- Profitability
- Profitability metrics, including gross profit margin, operating margin, and net profit margin, have shown increasing trends.
- The company's profitability ratios, such as Return on Average Assets, Return on Average Total Equity, and Return on Average Total Capital, are significantly higher than the industry averages, indicating strong profitability.
- Management actions, particularly pricing and productivity initiatives, are critical for maintaining and expanding margins, especially during economic downturns.
- Liquidity
- The current ratio and quick ratio are below 1, indicating potential liquidity concerns.
- Cash and short-term investments have shown a strong upward trend, providing some offset to the liquidity concerns.
- The company's emphasis on its defensive business model is crucial in the current uncertain economic climate, providing stability and resilience.
- Solvency
- Long-term debt has increased substantially, raising concerns about long-term solvency and financial risk.
- The company's debt-to-equity ratio is moderate compared to the industry average.
- The company's disciplined capital allocation strategy, balancing investments in the business with returns to shareholders, supports long-term value creation.
- Operational Efficiency
- Cost of goods sold and selling, general, and administrative expenses have decreased, indicating improved cost control.
- Inventories have decreased, which could reflect efficient inventory management or lower demand.
- The company's Enterprise Value to EBITDA ratio is higher than the industry average, indicating efficient earnings generation relative to its enterprise value.
- Cash Flow Analysis - Net income and funds from operations are trending upward, while depreciation, depletion & amortization and changes in working capital are trending downward. - Total capital expenditure is trending upward, while net investing cash flow is trending downward. - Cash dividends paid is trending upward, while net financing cash flow is trending downward.
- Risk Factors
- Weakening economic conditions, cost inflation, and supply chain disruptions could adversely impact Linde's financial results.
- Operational risks such as production facility failures, transportation accidents, and IT system breaches could disrupt the business.
- Regulatory changes related to climate change, environmental protection, and other areas could increase Linde's compliance costs.
- Future Outlook
- The company is focused on disciplined capital allocation, balancing investments in the business with returns to shareholders through dividends and share repurchases.
- Management expressed confidence in navigating economic uncertainty by leveraging their operating rhythm and delivering high-quality growth.
- The company is seeing secular growth opportunities in electronics and high-growth markets like India.
- Profitability
Financial statements
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Public filings
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- Linde is the global leader in industrial gases, serving a diverse set of end markets and leveraging its extensive geographic footprint and technological capabilities to drive growth
- The company faces headwinds from macroeconomic factors like inflation and supply chain disruptions, as well as operational risks related to its production and distribution network
- Linde is navigating legal disputes, particularly related to its terminated projects in Russia, but has secured favorable rulings in international arbitration so far
- Management has demonstrated the ability to maintain profitability and cash flow generation through pricing actions, productivity initiatives, and prudent capital allocation, positioning the company well to navigate the current environment
- Key risks include further economic deterioration, regulatory changes around emissions and climate change, and the potential for additional legal/regulatory challenges that could impact Linde's operations and financial performance
Core Business and Operations:
- Linde Plc is the largest industrial gas company globally, producing and distributing atmospheric gases (oxygen, nitrogen, argon, rare gases) and process gases (hydrogen, helium, carbon dioxide, carbon monoxide, electronic gases, specialty gases, acetylene)
- The company serves a diverse group of industries including healthcare, chemicals and energy, manufacturing, metals and mining, food and beverage, and electronics
- Linde operates through three geographic segments - Americas, EMEA, and APAC - as well as an Engineering segment that designs and builds gas production and processing plants
- The company has majority or wholly owned subsidiaries in approximately 45 European, Middle Eastern and African countries, 20 Asian and South Pacific countries, and 20 countries in North and South America
Industry and Market Trends:
- Linde faces risks from fluctuations in energy and raw material costs, as well as potential disruptions in supply
- The company operates globally and is subject to risks from international events, currency exchange rate fluctuations, and changes in regulations and government policies
- Increasing focus on climate change and emissions reduction could impact Linde's business, though the company is pursuing opportunities in clean energy technologies like hydrogen
Recent Events:
- Linde completed the acquisition of nexAir, LLC in 2023 to expand its geographic footprint in the U.S.
- The company deconsolidated its Russian gas and engineering business entities in 2022 due to the Russia-Ukraine conflict and related sanctions
- Linde has been engaged in legal disputes with RusChemAlliance over terminated engineering projects in Russia, securing favorable rulings in international arbitration
Risk Factors:
- Weakening economic conditions, cost inflation, and supply chain disruptions could adversely impact Linde's financial results
- Operational risks such as production facility failures, transportation accidents, and IT system breaches could disrupt the business
- Regulatory changes related to climate change, environmental protection, and other areas could increase Linde's compliance costs
- The company faces legal and tax risks from ongoing proceedings and investigations in various jurisdictions
Legal Matters:
- Linde is involved in various lawsuits and government investigations related to environmental, tax, antitrust, and personal injury claims
- The company is engaged in legal disputes with RusChemAlliance over terminated engineering projects in Russia, with Linde securing favorable rulings in international arbitration
- Former Linde AG shareholders filed appraisal proceedings seeking increased consideration for a previous cash merger squeeze-out, which Linde believes are not supported by sufficient evidence
Management's Discussion and Analysis:
- Linde's sales were flat in 2024 compared to 2023, with higher pricing offsetting volume declines and currency headwinds
- Reported operating profit increased 8% in 2024, driven by higher pricing and productivity initiatives that offset cost inflation
- The company generated strong cash flow from operations of $9.4 billion in 2024, funding capital expenditures, dividends, and share repurchases
- Linde maintains a strong balance sheet with ample liquidity and access to debt capital markets to support its growth initiatives
Earnings calls
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Earnings Report 2025Q1 (2025-05-01)
Key takeaways
- Defensive Business Model is Key: Linde's emphasis on its defensive business model is crucial in the current uncertain economic climate, providing stability and resilience.
- Management Actions Drive Growth: Management actions, particularly pricing and productivity initiatives, are critical for maintaining and expanding margins, especially during economic downturns.
- Capital Allocation Strategy is Balanced: The company's disciplined capital allocation strategy, balancing investments in the business with returns to shareholders, supports long-term value creation.
- China's Growth is Moderating: Linde anticipates moderated growth in China and is focusing on productivity improvements to offset macro risks.
- Decarbonization Opportunities are Evolving: The company sees potential opportunities in Europe due to a more pragmatic approach to decarbonization, particularly with low-carbon hydrogen projects.
Focus of management’s prepared remarks
- Defensive Business Model: Linde's business is inherently defensive due to resilient end markets (healthcare, electronics, food & beverage), on-site customers with fixed fees, and rental payments on owned assets. These categories account for almost two-thirds of global gas sales.
- EPS Growth Algorithm: Project contribution is a key part of Linde's EPS growth algorithm, and the company expects to continue announcing new project wins.
- APAC Market Trends: China shows strength in battery and electronics, but rare gases and helium prices are lower. Industrial end markets are soft, but Linde's Tier 1 customers are more stable. India remains a strong growth region.
- EMEA Market Trends: No meaningful improvement in industrial activity is observed, but pragmatic discussions around decarbonization are encouraging.
- Americas Market Trends: Canada and US packaged gases are seeing weakness, while US Bulk and Latin America volumes continue to grow. The Americas have the highest segment price increases.
- Project Backlog: The company has a strong backlog of $10 billion, with over $7 billion in sale of gas projects, underpinned by long-term contracts with secured returns.
- Capital Allocation: Disciplined capital allocation is a hallmark, balancing investments in the business and returning capital to shareholders. The annual dividend was raised by 8%, representing 32 straight years of dividend growth.
- Guidance Approach: The company is remaining guarded in the current environment but is managing factors within its control and adhering to its long-term capital allocation strategy.
Focus of the analyst Q&A
- Impact of Dow Project Delay:
- What impact will the Dow Alberta project delay have on Linde's associated project timing and startup?
- What contingencies does Linde have to protect itself from such delays?
- EMEA Margin Performance:
- What could the margin profile look like in EMEA once volumes eventually return, given the robust margin performance despite volume declines?
- Clean Energy Opportunities:
- How would the company size the clean energy market opportunity differently today compared to two years ago?
- How has the timing changed?
- What are customers saying about the IRA and its impact?
- Guidance and FX Impact:
- What was the impact of FX on the guidance, particularly in the Americas?
- Which manufacturing end markets are seeing the greatest slowing or demand weakness?
- Electronics Backlog and EMEA Margins:
- What is driving the backlog in electronics?
- Is there anything exceptional helping EMEA margins, or is it just delivering on the model?
- Backlog and Market Outlook:
- Have there been any delays or slowdowns on projects currently in the backlog?
- Where does the company see the biggest commitments, geographically and in terms of end markets?
- Income Statement Items:
- What is the expectation for other income in 2025, given the significant positive change in 2024?
- How was SG&A expense reduced, and is this trend expected to continue for the year?
- Margin Improvement Drivers:
- How would you size the productivity and pricing contributions to the 120 basis point operating margin improvement?
- What specific productivity initiatives are being pursued?
- 2025 Volume Outlook:
- Given the economic contraction, should the volume decline of 1% in Q1 be expected to stay around that level or worsen as the year unfolds?
- What are the long-term drivers for industrial demand recovery?
- Healthcare Business:
- What is the outlook for the healthcare business, particularly the home care segment?
- On-Shoring Opportunities:
- Does the company see other opportunities for outsized growth in the U.S. due to on-shoring, beyond electronics?
- Inflation and Pricing:
- If general inflation picks up, would pricing accelerate, or might there be a disconnect due to the weak macroeconomic backdrop?
- China Outlook:
- What are the updated thoughts on China in the near term, considering what the company is seeing and hearing from customers in April and May?
- How much runway does the company see on productivity in China to counterbalance macro risk?
- Decarbonization in Europe:
- What does the more pragmatic decarbonization approach in Europe mean for Linde in terms of opportunities?
Summary
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Financial Performance
Linde reported flat sales of $8.1 billion year-over-year, with underlying sales up 1% due to pricing offsetting lower volumes. Operating profit increased by 4% to $2.4 billion, resulting in a margin of 30.1%, a 120 basis point increase. EPS was $3.95, up 5% (8% excluding currency effects), finishing at the top end of the guidance range. Capex was $1.3 billion, split evenly between base and project capex. The company reaffirmed its full-year EPS guidance of $16.20 to $16.50, narrowing the range slightly.
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Revenue Drivers
Revenue growth was primarily driven by pricing increases, which offset lower base volumes due to sluggish industrial activity. Net acquisitions, mainly packaged gas tuck-ins in North America, contributed 1%. Project backlog contribution partially offset the decline in base volumes. APAC saw strength in battery and electronics, while industrial end markets remained soft. The Americas saw mixed results, with packaged gases weaker in Canada and the US, but bulk volumes grew in North and Latin America.
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Profit Margins and Cost Management
Operating margins expanded to 30.1%, driven by management actions in pricing and cost productivity. All segments saw margin expansion. The company expects management actions to continue supporting profit growth and margin expansion. SG&A expenses were down, partly due to restructuring charges taken in the previous quarter and lower incentive compensation.
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Guidance and Outlook
Second-quarter EPS guidance is $3.95 to $4.05, representing 3% to 5% growth (5% to 7% excluding currency headwinds). The full-year EPS guidance is $16.20 to $16.50. The guidance assumes recessionary conditions, translating to a roughly 2% EPS headwind from lower volumes. The company maintains a cautious outlook due to global trade policy uncertainties and anticipates volatility in end-market trends.
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Strategic Initiatives
The company is focused on disciplined capital allocation, balancing investments in the business with returns to shareholders through dividends and share repurchases. They raised the annual dividend by 8%, marking 32 years of consecutive dividend growth. They repurchased $1.1 billion of stock and reinvested almost $1.3 billion back into the business. The company is actively constructing two of the largest projects in its history.
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Management Commentary
Management emphasized the defensive nature of Linde's business model, highlighting resilient end markets, on-site customer contracts with fixed fees, and rental payments on owned assets. They expressed confidence in navigating economic uncertainty by leveraging their operating rhythm and delivering high-quality growth. They acknowledged the dampening effect of global trade policy changes on industrial activity. They highlighted the importance of management actions and capital allocation in driving EPS growth.
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Industry and Market Conditions
Management noted more negative than positive developments in the current environment. They observed consistent trends in China, weakness in manufacturing in Australia and Canada, and better growth in India. EMEA has not seen meaningful improvement in industrial activity. They anticipate more volatility in end-market trends until there is greater clarity and stability in global trade policy. They are seeing secular growth opportunities in electronics and high-growth markets like India.
Comparative analysis
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Benchmarks (as of 2025-05-19)
Materials Select Sector SPDR Fund (XLB)
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Performance Comparison:
- Linde Plc (LIN) has generally outperformed the Materials Select Sector SPDR Fund (XLB) over the analyzed periods, particularly in the 1-year, 2-year, and 3-year returns. For instance, the 3-year annualized return for LIN is 15.0% compared to 4.08% for XLB. However, in the 1-month period, LIN underperformed XLB, with returns of 3.71% and 9.75% respectively.
- The consistency of LIN's performance relative to XLB varies. While LIN has shown strong long-term outperformance, there are shorter periods, such as the 1-month period, where it lags behind, indicating that XLB may perform better in certain market conditions.
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Risk and Return Analysis:
- Linde Plc (LIN) provides higher annualized returns compared to the Materials Select Sector SPDR Fund (XLB) over the 1-year, 2-year, and 3-year periods. For example, the 3-year annualized return for LIN is 15.0% versus 4.08% for XLB.
- Linde Plc (LIN) generally exhibits higher annualized volatility compared to the Materials Select Sector SPDR Fund (XLB), suggesting it is a riskier investment. However, in late 2024, the volatility of LIN and XLB converged.
- The maximum drawdown for Linde Plc (LIN) was -22.82% on 2022-09-26, while for Materials Select Sector SPDR Fund (XLB) it was -24.72% on 2022-09-26. This indicates that XLB experienced a slightly larger peak-to-trough decline than LIN during the observed period, suggesting a slightly higher risk profile for XLB.
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Risk-Adjusted Performance:
- Linde Plc (LIN) generally exhibits higher Sharpe Ratios compared to the Materials Select Sector SPDR Fund (XLB), indicating better risk-adjusted returns.
- The beta value for Linde Plc (LIN) is generally below 1, indicating that it is less volatile than the market. The beta values for Materials Select Sector SPDR Fund (XLB) are generally around or below 1, also indicating it is less volatile than the market.
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Overall Assessment:
- Linde Plc (LIN) has demonstrated strong long-term performance, outperforming the Materials Select Sector SPDR Fund (XLB) in terms of annualized returns and risk-adjusted returns (Sharpe Ratio). However, LIN also exhibits higher volatility and is more sensitive to market movements, as indicated by its beta.
- A significant trend is the convergence of volatility between LIN and XLB in late 2024, suggesting that LIN's risk profile may be becoming more aligned with the broader materials sector.
Peers Price History(as of 2025-05-19)
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Performance Comparison:
- Linde Plc (LIN) has shown mixed performance compared to its peers. Over the past three years, LIN outperformed both The Sherwin-Williams Co. (SHW) and Air Products & Chemicals, Inc. (APD), with a return of 52.09% compared to 44.25% and 25.95%, respectively. However, over shorter periods like 1 year and 2 years, SHW significantly outperformed LIN. For example, in the last 2 years, SHW returned 59.68% compared to LIN's 28.88%. More recently, YTD performance shows LIN outperforming SHW and APD.
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Risk and Return Analysis:
- Linde Plc (LIN) has provided higher annualized returns over a 3-year period (15.0%) compared to The Sherwin-Williams Co. (SHW) (12.99%) and Air Products & Chemicals, Inc. (APD) (7.99%). However, SHW has provided higher annualized returns over the 1-year and 2-year periods. In terms of annualized volatility, LIN generally exhibited lower volatility compared to SHW but was similar to APD, except for APD's volatility spikes in Q1 2024 and Q4 2023. The maximum drawdown for LIN was -41.75% on 07/14/2022, which is similar to SHW's -42.46% on 10/20/2022, but higher than APD's -31.77% on 02/07/2024. This indicates that LIN and SHW have similar risk profiles, while APD is less risky.
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Risk-Adjusted Performance:
- Linde Plc (LIN) generally had higher Sharpe Ratios than The Sherwin-Williams Co. (SHW) and Air Products & Chemicals, Inc. (APD) for much of the period, indicating better risk-adjusted returns. However, The Sherwin-Williams Co. (SHW) had higher Sharpe Ratios in Q1 2024 and Q3 2024. Air Products & Chemicals, Inc. (APD) had negative Sharpe Ratios for much of the period. The Beta values for LIN and APD were generally below 1, indicating lower sensitivity to market movements compared to the overall market. The Beta values for SHW were generally around 1, indicating similar sensitivity to market movements compared to the overall market.
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Overall Assessment:
- Linde Plc (LIN) has demonstrated strong long-term performance, outperforming its peers over a 3-year period. However, The Sherwin-Williams Co. (SHW) has shown superior performance over shorter periods like 1 and 2 years. LIN generally offers better risk-adjusted returns compared to SHW and APD, as indicated by its higher Sharpe Ratios. LIN and APD have lower risk profiles compared to SHW, as indicated by their lower Beta values. Investors should consider their investment horizon and risk tolerance when choosing between these three companies.
Peers Fundamentals(as of 2025-03-31)
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Market Position and Size:
- Linde Plc (LIN) stands out with a significantly larger market capitalization of $216,688.38 million compared to The Sherwin-Williams Co. (SHW) at $90,717.56 million and Air Products & Chemicals, Inc. (APD) at $61,718.13 million.
- This substantial market cap is supported by higher revenue ($33,017 million), gross income ($12,192 million), EBITDA ($12,520 million), and net income ($6,611 million) compared to its peers.
- LIN's dominant market position is evident through its significantly larger size and robust financial performance within its peer group.
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Profitability and Efficiency:
- LIN's Gross Profit Margin of 36.93% is lower than SHW's 48.72% but higher than APD's 32.01%, and significantly exceeds the industry average of -37.29%.
- With an EBITDA Margin of 37.92%, LIN surpasses SHW's 19.39% and slightly exceeds APD's 35.92%, all significantly above the industry average of -1003.53%.
- LIN's Net Profit Margin of 20.02% is greater than SHW's 11.63% and APD's 12.87%, outperforming the industry average of -1135.07%.
- The company's superior profitability, particularly in EBITDA and Net Profit Margins, indicates efficient operations and cost management, especially considering its larger size.
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Financial Health and Stability:
- LIN's Current Ratio of 0.94 is greater than SHW's 0.77 but less than APD's 1.0, falling below the industry average of 4.03.
- A Quick Ratio of 0.8 is higher than SHW's 0.45 but less than APD's 0.85, also below the industry average of 3.43.
- The Total Debt to Total Equity Ratio for LIN is 62.83, significantly lower than SHW's 310.4 and APD's 112.19, and also below the industry average of 107.66.
- LIN's Debt / EBITDA ratio of 1.91 is less than SHW's 2.41 and APD's 3.67, and also below the industry average of 4.3.
- While its liquidity ratios are below the industry average, LIN's debt levels are significantly lower than its peers and the industry average, suggesting a more conservative approach to leverage.
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Valuation and Market Perception:
- LIN's Enterprise Value To Sales ratio of 7.32 is greater than SHW's 4.38 and APD's 6.88, but significantly less than the industry average of 142.53.
- An Enterprise Value To EBITDA of 19.31 is less than SHW's 22.11 but slightly greater than APD's 19.0, exceeding the industry average of 12.84.
- The Price To Earnings ratio for LIN is 33.41, less than SHW's 34.26 and APD's 40.31, and also below the industry average of 42.22.
- LIN's Price to Book Ratio of 5.7 is significantly less than SHW's 21.96 but greater than APD's 4.2, exceeding the industry average of 2.64.
- A Price To Sales Ratio of 6.64 is greater than SHW's 3.97 and APD's 5.14, but significantly less than the industry average of 150.
- LIN's valuation metrics suggest it is reasonably valued compared to its peers, with a mix of higher and lower ratios depending on the specific metric.
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Cash Flow and Capital Management:
- LIN's Net Operating Cash Flow of $9,630 million is significantly greater than SHW's $3,151 million and APD's $3,358.2 million.
- Total Capital Expenditure for LIN is $4,719 million, significantly greater than SHW's $975.5 million but less than APD's $7,690.9 million.
- Free Cash Flow for LIN is $4,911 million, significantly greater than SHW's $2,175.5 million and APD's -$4,332.7 million.
- LIN demonstrates strong cash flow generation capabilities, with significantly higher net operating cash flow and free cash flow compared to its peers.
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Growth and Future Prospect:
- LIN shows consistently lower growth in Sales/Revenue, Free Cash Flow, and Free Cash Flow Margin compared to the peer group average.
- Conversely, LIN exhibits consistently higher growth in Net Income, Basic Earnings per Share, and EBIT Margin compared to the peer group average.
- The most significant year-to-year fluctuations for LIN are observed in Free Cash Flow and Free Cash Flow Margin, as indicated by the high standard deviations.
- LIN's 3-year CAGR is lower than its 5-year CAGR for Sales/Revenue, EBITDA, Net Income, Basic Earnings per Share, Free Cash Flow, Free Cash Flow Margin, and EBIT Margin, suggesting a deceleration in growth over the most recent three years compared to the previous five years.
- LIN's superior growth in Net Income, Basic Earnings per Share, and EBIT Margin suggests a focus on improving profitability and operational efficiency.
- The slower revenue growth compared to profit growth could be a potential concern, as it may not be sustainable in the long term.
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Potential for Investment:
- Linde Plc (LIN) presents an attractive investment opportunity due to its dominant market position, strong cash flow generation, and conservative capital structure.
- While its growth in certain areas lags behind peers, its superior profitability and lower debt levels contribute to overall financial stability.
- LIN's lower valuation metrics compared to its peers suggest that it may be undervalued relative to its earnings potential.
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Key Risks and Considerations:
- LIN's liquidity ratios (Current Ratio and Quick Ratio) are below the industry average, indicating potential short-term liquidity challenges.
- The company's slower revenue growth compared to profit growth could be a potential concern, as it may not be sustainable in the long term.
- LIN shows lower growth in Sales/Revenue, Free Cash Flow, and Free Cash Flow Margin compared to the peer group average.
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Overall Assessment:
- Linde Plc (LIN) exhibits strong financial health, characterized by its dominant market position, robust cash flow generation, and conservative capital structure.
- While its liquidity ratios are below industry averages and growth in certain areas lags behind peers, its superior profitability and lower debt levels contribute to overall financial stability.
- LIN holds a leading competitive position within its peer group and the broader industry, driven by its substantial market capitalization and strong financial performance.
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