Key takeaways
View moreLinde's current valuation appears justified given its strong market position, superior profitability metrics, and robust growth prospects balanced against elevated valuation multiples and potential risks. While the EV/EBITDA ratio is above industry average, this premium is warranted by the company's defensive business model, strong execution track record, and significant barriers to entry in its core markets.
- Linde's profitability metrics, including ROA (8.11%) and ROE (17.20%), are significantly above industry averages, indicating strong financial health and efficient management.
- The company's current ratio, ranging from 0.89 to 0.96, suggests potential liquidity concerns, requiring close monitoring of short-term obligations.
- Increasing long-term debt necessitates careful monitoring of the company's solvency and financial risk, despite a moderate debt-to-equity ratio (56.36% to 62.83%).
- Linde's disciplined capital allocation strategy, balancing investments in the business with returns to shareholders, supports long-term value creation and stability.
- Secular growth opportunities in electronics and high-growth markets like India, along with a $10 billion project backlog, offer significant potential for future revenue expansion.
- The company's Enterprise Value to Sales ratio of 7.32 is significantly lower than the industry average of 142.53, suggesting efficient revenue generation relative to its enterprise value.
- Linde has generally outperformed the Materials Select Sector SPDR Fund (XLB) over longer periods, with a 71.08% return over 3 years compared to XLB's 25.91%.
- Management's emphasis on a defensive business model, with resilient end markets and long-term contracts, provides stability in uncertain economic conditions.
- Legal disputes, particularly related to terminated projects in Russia, pose ongoing risks that could impact Linde's operations and financial performance.
- The company's full-year EPS guidance of $16.20 to $16.50 reflects a cautious outlook due to global trade policy uncertainties and anticipated volatility in end-market trends.
Evaluation summary
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Company Overview:
- Linde Plc is the world's largest industrial gas company, 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 range 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, along with an Engineering segment that designs and builds gas production and processing plants.
- Benchmarks used for comparative analysis include the Materials Select Sector SPDR Fund (XLB). Peers include 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 2024-09-30 to $8.112 billion in 2025-03-31.
- Net income has fluctuated, with a high of $1.769 billion in 2024-12-31 and a low of $1.550 billion in 2024-09-30. The most recent quarter shows a net income of $1.673 billion.
- Gross profit margin has remained relatively stable, ranging from 36.38% to 37.54% over the last four quarters.
- Net profit margin has also been consistent, ranging from 18.55% to 20.83% over the same period.
- Linde's Return on Average Assets (ROA) is significantly higher than the industry average, with a recent ROA of 8.11% compared to the industry average of -5.98%.
- Return on Average Total Equity (ROE) is also substantially higher, with a recent ROE of 17.20% compared to the industry average of -34.74%.
- Return on Average Total Capital is 14.17%, significantly above the industry average of -1.82%.
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Operational Efficiency:
- Total current assets have fluctuated, with a high of $13.597 billion in 2025-03-31 and a low of $12.843 billion in 2024-06-30.
- Total current liabilities have also varied, with a high of $14.544 billion in 2024-12-31 and a low of $13.504 billion in 2024-06-30.
- Working capital has been negative, ranging from -$589 million to -$1.599 billion, indicating potential short-term liquidity challenges.
- Net operating cash flow has fluctuated, with a high of $2.809 billion in 2024-12-31 and a low of $1.929 billion in 2024-06-30. The most recent quarter shows a net operating cash flow of $2.161 billion.
- Free cash flow to equity has also varied, with a high of $1.665 billion in 2024-09-30 and a low of $796 million in 2024-06-30.
- Total capital expenditure has remained relatively stable, ranging from $1.066 billion to $1.270 billion.
- Cash dividends paid have been consistently around $660 million to $710 million per quarter.
- The current ratio is below 1, ranging from 0.89 to 0.96, indicating potential liquidity concerns.
- The debt-to-equity ratio has been relatively stable, ranging from 56.36% to 62.83%.
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Growth Opportunities:
- Linde is focused on disciplined capital allocation, balancing investments in the business with returns to shareholders through dividends and share repurchases.
- The company sees secular growth opportunities in electronics and high-growth markets like India.
- Linde anticipates moderated growth in China and is focusing on productivity improvements to offset macro risks.
- The company sees potential opportunities in Europe due to a more pragmatic approach to decarbonization, particularly with low-carbon hydrogen projects.
- Linde 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.
- The company is actively constructing two of the largest projects in its history.
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Recent Developments and Market Sentiment:
- Linde's management emphasizes the defensive nature of its business model, highlighting resilient end markets, on-site customer contracts with fixed fees, and rental payments on owned assets.
- The company 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.
- The company completed the acquisition of nexAir, LLC in 2023 to expand its geographic footprint in the U.S.
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Risks and Threats:
- 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.
- 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.
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Valuation Analysis:
- Linde's Enterprise Value to EBITDA ratio is higher than the industry average, with a recent ratio of 19.31 compared to the industry average of 12.84.
- The Enterprise Value to Sales ratio is significantly lower than the industry average, with a recent ratio of 7.32 compared to the industry average of 142.53.
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Price Performance:
- Linde Plc (LIN) generally outperformed the Materials Select Sector SPDR Fund (XLB) over the analyzed periods. For instance, the year-to-date performance shows LIN with a 14.02% return compared to XLB's 6.57%, indicating a 7.45% overperformance. Over a 3-year period, LIN's return was 71.08% versus XLB's 25.91%, a significant outperformance of 45.17%. However, in shorter time frames such as 1 month and 3 months, LIN underperformed XLB by 0.31% and 1.5% respectively.
- Linde Plc (LIN) has shown mixed performance compared to its peers. Over the past year, LIN has underperformed both The Sherwin-Williams Co. (SHW) and Air Products & Chemicals, Inc. (APD), with a return of 10.75% compared to 17.04% for SHW and 16.13% for APD. However, over a 3-year period, LIN has significantly outperformed both SHW and APD, with a return of 71.08% compared to 50.04% for SHW and 24.54% for APD. More recently, LIN has outperformed both peers year-to-date, with a return of 14.02% compared to 3.51% for SHW and 0.17% for APD.
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Future Outlook:
- Linde reaffirmed its full-year EPS guidance of $16.20 to $16.50.
- Second-quarter EPS guidance is $3.95 to $4.05, representing 3% to 5% growth (5% to 7% excluding currency headwinds).
- 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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Summary:
- Linde Plc is a global leader in industrial gases with strong profitability metrics, significantly above industry averages.
- 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.
- Key strengths include its defensive business model, strong profitability, and disciplined capital allocation. Weaknesses include potential liquidity concerns and increasing long-term debt. Opportunities lie in secular growth markets and decarbonization efforts. Threats include economic downturns, regulatory changes, and legal disputes.
- Overall, Linde presents a mixed investment profile with strong fundamentals and growth potential balanced against liquidity and solvency concerns.
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 2025-06-30)
Materials Select Sector SPDR Fund (XLB)
- Performance Comparison:
- Linde Plc (LIN) generally outperformed the Materials Select Sector SPDR Fund (XLB) over the analyzed periods. For instance, the year-to-date performance shows LIN with a 14.02% return compared to XLB's 6.57%, indicating a 7.45% overperformance. Over a 3-year period, LIN's return was 71.08% versus XLB's 25.91%, a significant outperformance of 45.17%. However, in shorter time frames such as 1 month and 3 months, LIN underperformed XLB by 0.31% and 1.5% respectively.
- Risk and Return Analysis:
- The annualized returns show that Linde Plc (LIN) provided higher returns than the Materials Select Sector SPDR Fund (XLB). Over 3 years, LIN's annualized return was 19.6% compared to XLB's 7.98%, a difference of 11.62%.
- Linde Plc (LIN) generally exhibited higher annualized volatility compared to the Materials Select Sector SPDR Fund (XLB) for most of the period. For example, in early July 2022, LIN's volatility was 34.22% compared to XLB's 29.41%.
- The maximum drawdown for Linde Plc (LIN) was -22.82% on 2022-09-26, while for the 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.
- Risk-Adjusted Performance:
- Linde Plc (LIN) generally exhibited higher Sharpe Ratios compared to the Materials Select Sector SPDR Fund (XLB) for most of the period, indicating that LIN offered better risk-adjusted returns. As of late June 2025, the Sharpe Ratio for LIN was 0.52, while for XLB it was 0.17.
- The Beta of Linde Plc (LIN) was generally below 1, indicating that it was less volatile than the market. As of late June 2025, the Beta for LIN was 0.62, while for XLB it was 0.8. This suggests that LIN was less sensitive to market movements compared to XLB.
- Overall Assessment:
- Linde Plc (LIN) has generally demonstrated superior performance compared to the Materials Select Sector SPDR Fund (XLB) over the analyzed periods. While LIN exhibited higher volatility, its higher Sharpe Ratio suggests better risk-adjusted returns. The lower Beta of LIN indicates that it is less sensitive to market movements compared to XLB. These factors could inform investment decisions, suggesting that LIN may be a more attractive option for investors seeking higher returns with relatively managed risk.
Peers Price History(as of 2025-06-30)
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Performance Comparison:
- Linde Plc (LIN) has shown mixed performance compared to its peers. Over the past year, LIN has underperformed both The Sherwin-Williams Co. (SHW) and Air Products & Chemicals, Inc. (APD), with a return of 10.75% compared to 17.04% for SHW and 16.13% for APD. However, over a 3-year period, LIN has significantly outperformed both SHW and APD, with a return of 71.08% compared to 50.04% for SHW and 24.54% for APD. More recently, LIN has outperformed both peers year-to-date, with a return of 14.02% compared to 3.51% for SHW and 0.17% for APD.
- The consistency of LIN's performance varies across different timeframes. While it has shown strong long-term growth, its short-term performance has been more volatile, with periods of both outperformance and underperformance relative to its peers.
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Risk and Return Analysis:
- The annualized returns show that LIN has a lower 1-year return (10.75%) compared to SHW (17.04%) and APD (16.13%). However, over a 3-year period, LIN's annualized return of 19.6% is higher than SHW's 14.48% and APD's 7.59%.
- In terms of annualized volatility, LIN has generally exhibited lower volatility compared to SHW and APD. For example, as of 2024-12-30, LIN's annualized volatility was 14.56%, while SHW's was 22.38% and APD's was 18.07%.
- The maximum drawdown for LIN was -22.82% on 2022-09-26, which is less severe than SHW's maximum drawdown of -42.46% on 2022-10-20 and APD's maximum drawdown of -31.77% on 2024-02-07. This indicates that LIN has a more conservative risk profile compared to its peers.
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Risk-Adjusted Performance:
- The Sharpe Ratio for LIN has generally been higher than that of SHW, indicating better risk-adjusted returns. However, APD has shown higher Sharpe Ratios than LIN in some periods. For example, on 2024-11-29, LIN's Sharpe Ratio was 0.86, while SHW's was 1.83 and APD's was 1.
- The Beta value for LIN has generally been below 1, indicating that it is less sensitive to market movements compared to SHW, which has a Beta value around or above 1. For example, on 2024-12-30, LIN's Beta was 0.51, while SHW's was 0.81 and APD's was 0.39.
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Overall Assessment:
- Linde Plc (LIN) presents a mixed profile when compared to The Sherwin-Williams Co. (SHW) and Air Products & Chemicals, Inc. (APD). While LIN has demonstrated strong long-term performance and lower volatility, it has underperformed its peers in the short term.
- LIN's lower Beta value suggests a more conservative investment, less sensitive to market fluctuations. Its higher Sharpe Ratio, relative to SHW, indicates better risk-adjusted returns. However, APD has shown higher Sharpe Ratios in some periods.
- Recent trends indicate that LIN has maintained low volatility, while SHW has shown moderate volatility and APD has exhibited high volatility. This suggests that LIN has become relatively more stable compared to its peers in the recent period.
- Investors may find LIN attractive for its stability and long-term growth potential, but should be aware of its recent underperformance compared to SHW and APD.
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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