ESAB Corporation (ESAB) | Investment Case

1. Company Snapshot

1.a. Company Description

ESAB Corporation formulates, develops, manufactures, and supplies consumable products and equipment for use in cutting, joining, and automated welding, as well as gas control equipment.Its comprehensive range of welding consumables includes electrodes, cored and solid wires, and fluxes using a range of specialty and other materials; and cutting consumables, including electrodes, nozzles, shields, and tips.The company's fabrication technology equipment ranges from portable welding machines to large customized automated cutting and welding systems.

It also offers a range of digital software and solutions to help its customers increase their productivity, remotely monitor their welding operations, and digitize their documentation.The company sells its products under the ESAB brand to various end markets, including general industry, construction, infrastructure, transportation, energy, renewable energy, and medical and life sciences.It offers its products through independent distributors and direct salespeople.

ESAB Corporation was incorporated in 2021 and is based in Wilmington, Delaware.

Show Full description

1.b. Last Insights on ESAB

ESAB Corporation's recent performance was driven by positive organic growth, automation rebound, and raised FY 2025 guidance. The company's Americas segment stabilized, while EMEA & APAC grew, and EWM integration offers high-margin opportunities. Temporary margin pressure from tariffs and EWM dilution is expected to normalize. Vanguard Personalized Indexing Management LLC decreased its stake in ESAB by 3.4%. The company reported Q3 earnings of $1.32 per share, beating estimates. Its growth outlook remains strong, supported by strategic acquisitions and a compounder strategy.

1.c. Company Highlights

Last Price	110.65
Change Percentage	-2.30%
Open	113.26
Previous Close	113.26
Market Cap ( Millions)	6718
Volume	355906
Year High	135.84
Year Low	100.17
M A 50	114.55
M A 200	118.85

FCF Yield	3.54%
Dividend Yield	0.33%
ROE	12.35%
Debt / Equity	69.33%
Net Debt / EBIDTA	236.98%
Price To Book	3.19
Price Earnings Ratio	27.77
Price To FCF	28.22
Price To sales	2.41
EV / EBITDA	15.12

2. ESAB's Q3 2025 Earnings: A Strong Performance

ESAB reported a robust third quarter, with sales rising 8% to $687 million, driven by a 2% organic growth. Adjusted EBITDA increased 7% to $133 million, reflecting strong execution on margin, despite additional tariff impact in the Americas. The company's EPS came in at $1.32, beating estimates of $1.27. The acquisition of EWM contributed approximately 2 points of growth and $1 million in adjusted EBITDA within Q3 results. As Shyam Kambeyanda noted, "Our global footprint is an advantage, with 80% of our manufacturing in region for region, reducing tariff impact, shortened lead times, and supporting share gains."

Publication Date: Oct -31

                                    📋 Highlights
                                    Organic Growth Resumed:
                                                Organic sales rose 2% YoY to $687M, driven by EBX execution and EWM acquisition.
EBITDA Growth:
                                                Adjusted EBITDA increased 7% to $133M, despite $15M deferred automation shipments and tariff headwinds.
EWM Acquisition Impact:
                                                EWM contributed 2% growth and $1M adjusted EBITDA in Q3, accelerating full-year sales guidance to $2.71B-$2.73B.
Margin Strategy:
                                                Shift to equipment/gas control aims for >22% EBITDA margins by 2028, offsetting 100-bp margin decline from 2025.
Geographic Shift:
                                                80% regional manufacturing reduces tariffs, with Europe leading with high-single-digit equipment growth and 2026 margin recovery expected.

                                

Revenue Growth and Margin Performance

The company's revenue growth was driven by a combination of organic growth and the acquisition of EWM. The adjusted EBITDA margin was slightly lower due to investments in sales and growth initiatives, as well as tariff-based impact. The company's focus on shifting its mix towards equipment and gas control is expected to drive higher margins in the future, with a target of 22-plus EBITDA margins by 2028 or sooner.

Valuation and Growth Expectations

With a P/E Ratio of 29.64 and an EV/EBITDA of 15.73, the market is pricing in a certain level of growth for ESAB. Analysts estimate next year's revenue growth at 6.8%. The company's ROE of 12.35% and ROIC of 8.11% indicate a strong return on equity and invested capital. The Net Debt / EBITDA ratio of 2.12 suggests a manageable level of debt.

Segment Performance and Outlook

The EMEA and APAC segment saw strong orders and momentum in high-growth markets, driven by equipment and automation. The company expects this momentum to accelerate in 2026, driven by defense, infrastructure, and energy investments. The acquisition of EWM has been well-received by the team and has provided opportunities for ESAB products to be distributed through EWM's channels.

Guidance and Future Expectations

ESAB raised its full-year guidance to $2.71 billion to $2.73 billion in total sales, with an adjusted EBITDA of $535 million to $540 million. The company is off to a good start in Q4, with core growth improving and comparables getting better. The company expects to benefit from its restructuring efforts and supply chain optimizations in 2026.

3. NewsRoom

ESAB Appoints Dr. Sébastien Martin to Board; Announces Retirement of Director Patrick Allender

Dec -04

Source: businesswire.com

Advantage Alpha Capital Partners LP Has $3.21 Million Holdings in ESAB Corporation $ESAB

Nov -28

Source: defenseworld.net

Chuck Royce's Strategic Moves: Significant Reduction in Air Lease Corp

Nov -12

Source: gurufocus.com

ESAB Corporation: Visible Path For Accelerated Growth And Margin Expansion (Rating Upgrade)

Nov -03

Source: seekingalpha.com

ESAB (NYSE:ESAB) vs. Liquidmetal Technologies (OTCMKTS:LQMT) Head-To-Head Survey

Nov -03

Source: defenseworld.net

ESAB Corporation (ESAB) Q3 2025 Earnings Call Transcript

Oct -29

Source: seekingalpha.com

Esab (ESAB) Tops Q3 Earnings and Revenue Estimates

Oct -29

Source: zacks.com

ESAB Corporation Announces Third Quarter 2025 Results

Oct -29

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.81%)

6. Segments

Consumables

Expected Growth: 2.5%

ESAB Corporation's Consumables segment growth of 2.5% is driven by increasing demand for welding and cutting solutions in the manufacturing and construction industries, coupled with the company's strategic expansion into emerging markets and continuous product innovation, resulting in market share gains and pricing power.

Equipment

Expected Growth: 3.5%

ESAB Corporation's equipment segment growth is driven by increasing demand for welding and cutting solutions in the infrastructure, construction, and manufacturing industries. The company's focus on innovation, quality, and customer service has enabled it to gain market share and expand its product offerings, resulting in a 3.5% growth rate.

7. Detailed Products

Welding Consumables

ESAB offers a wide range of welding consumables, including electrodes, fluxes, and welding wires for various welding processes such as Shielded Metal Arc Welding (SMAW), Gas Metal Arc Welding (GMAW), Gas Tungsten Arc Welding (GTAW), and Flux Cored Arc Welding (FCAW).

Welding Equipment

ESAB provides a comprehensive range of welding equipment, including welding machines, welding guns, and welding accessories for MIG, TIG, and ARC welding processes.

Cutting Systems

ESAB offers a range of cutting systems, including plasma cutting, oxy-fuel cutting, and laser cutting systems for various industrial applications.

Welding Automation

ESAB provides welding automation solutions, including robotic welding cells and welding automation systems for high-volume production.

Welding Safety and Protection

ESAB offers a range of welding safety and protection products, including welding helmets, welding gloves, and welding safety glasses.

8. ESAB Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

ESAB Corporation faces moderate threat from substitutes due to the availability of alternative welding and cutting products from competitors.

Bargaining Power Of Customers

ESAB Corporation's customers have limited bargaining power due to the company's strong brand reputation and wide distribution network.

Bargaining Power Of Suppliers

ESAB Corporation's suppliers have moderate bargaining power due to the company's dependence on a few key suppliers for raw materials.

Threat Of New Entrants

ESAB Corporation faces low threat from new entrants due to the high barriers to entry in the welding and cutting industry.

Intensity Of Rivalry

ESAB Corporation operates in a highly competitive industry with intense rivalry among established players, leading to high marketing and advertising expenses.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	39.30%
Debt Cost	9.76%
Equity Weight	60.70%
Equity Cost	11.37%
WACC	10.73%
Leverage	64.75%

11. Quality Control: ESAB Corporation passed 5 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Mueller Industries

A-Score: 6.3/10

Value: 4.5

Growth: 7.1

Quality: 7.9

Yield: 2.0

Momentum: 8.5

Volatility: 8.0

1-Year Total Return ->

AZZ

A-Score: 6.3/10

Value: 6.7

Growth: 6.7

Quality: 6.9

Yield: 2.0

Momentum: 8.0

Volatility: 7.3

1-Year Total Return ->

Worthington Industries

A-Score: 5.0/10

Value: 3.6

Growth: 3.1

Quality: 5.7

Yield: 3.0

Momentum: 8.5

Volatility: 6.0

1-Year Total Return ->

Carpenter Technology

A-Score: 4.9/10

Value: 1.1

Growth: 7.2

Quality: 6.9

Yield: 1.0

Momentum: 9.0

Volatility: 4.0

1-Year Total Return ->

ATI

A-Score: 4.6/10

Value: 2.4

Growth: 6.8

Quality: 5.6

Yield: 0.0

Momentum: 8.0

Volatility: 4.7

1-Year Total Return ->

ESAB

A-Score: 4.1/10

Value: 3.0

Growth: 4.7

Quality: 5.9

Yield: 0.0

Momentum: 5.0

Volatility: 6.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

13.52%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

10.73%

ESAB Corporation - US29605J1060

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on ESAB

1.c. Company Highlights

Strong Momentum

Less Volatile

Average Quality

Earnings Beats

Revenues Beats

Average Yield

Fairly Valued

Stable Momentum

Expensive

2. ESAB's Q3 2025 Earnings: A Strong Performance

Revenue Growth and Margin Performance

Valuation and Growth Expectations

Segment Performance and Outlook

Guidance and Future Expectations

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.81%)

6. Segments

Consumables

Expected Growth: 2.5%

Equipment

Expected Growth: 3.5%

7. Detailed Products

Welding Consumables

Welding Equipment

Cutting Systems

Welding Automation

Welding Safety and Protection

8. ESAB Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: ESAB Corporation passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

110.65$

Current Price

110.65$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA