Linde LIN
What does Linde do?
Linde is one of the world's largest suppliers of industrial gases. Its product range includes air gases such as oxygen, nitrogen and argon, as well as process gases such as hydrogen, helium, carbon dioxide and specialty gases for the electronics industry. Customers include healthcare, chemicals and energy, metal processing and mining, food and beverages, manufacturing, and semiconductor and electronics producers.
The company earns its money mainly by supplying gases, either as liquefied gas by truck, in cylinders, or via pipelines and plants built directly at the customer's site. Long-term supply contracts with minimum purchase volumes and price adjustment clauses are common. In addition, Linde designs and builds turnkey plants for third parties, such as air separation, hydrogen and synthesis gas plants. Because of high capital costs, regional distribution networks and close customer ties, the industry is highly consolidated; Linde is one of a few market-leading suppliers and has a broad geographic presence.
Score profile
Rank vs. Specialty Chemicals (37 companies). 10 = top of the group, 5 = middle. Calculated from the metrics below, without AI.
Metrics compared with the industry
On profitability and quality, Linde ranks among the best in the group Specialty Chemicals (9.2/10). On growth, the company ranks below average in the group Specialty Chemicals (3.7/10). On valuation (higher = cheaper), the stock ranks below average in the group Specialty Chemicals (2.1/10). On financial strength, Linde ranks below average in the group Specialty Chemicals (2.9/10).
| Metric | Stock | Group median | Ranking |
|---|---|---|---|
| Forward P/E | 26.7x | 15.6x | better than 23 % |
| Trailing P/E | 34.7x | 27.9x | better than 34 % |
| PEG ratio | 2.0x | 1.8x | better than 44 % |
| EV/EBITDA | 19.1x | 11.9x | better than 15 % |
| Price/sales | 6.6x | 1.6x | better than 1 % |
| Price/book | 6.1x | 2.0x | better than 18 % |
| Revenue growth | 9.2% | 8.1% | better than 58 % |
| Earnings growth | -10.5% | 0.0% | better than 15 % |
| Gross margin | 47.9% | 31.6% | better than 93 % |
| Operating margin | 28.0% | 12.7% | better than 96 % |
| Net margin | 19.3% | 5.3% | better than 99 % |
| Return on equity | 17.7% | 9.6% | better than 80 % |
| Debt/equity | 65.1% | 68.5% | better than 56 % |
| Current ratio | 0.9x | 1.8x | better than 4 % |
| Free cash flow yield | 1.8% | 3.9% | better than 28 % |
| Dividend yield | 1.2% | 1.8% | – |
| Payout ratio | 41.8% | 40.8% | – |
| Beta | 0.68 | 0.90 | – |
Valuation: what is Linde worth?
Two valuation approaches – a discounted cash flow model and a valuation at the industry’s median multiples – give Linde a model range of 214.34 USD to 342.98 USD per share.
27 analysts, average rating “Buy”, average price target 551.04 USD (+5.6%).
The full DCF matrix, the reverse DCF (what growth the price implies) and scenarios are part of the Pro analysis.
What the business depends on
- Long-term supply contracts with minimum purchase volumes and cost pass-through provide recurring and comparatively predictable revenue from the gas business.
- Demand depends on industrial production in customer sectors such as chemicals, metals, electronics and healthcare.
- New large on-site plants for customers and pricing power in regional markets support structural growth.
Risks
- High energy costs are a significant cost factor, and delayed pass-through to customers can weigh on margins.
- Large projects, for example in plant engineering and hydrogen, carry risks from cost overruns, delays and dependence on customer decisions.
- Economic weakness in cyclical customer industries, as well as currency and regulatory risks in many countries, can affect sales and earnings.
What to look for with Linde
The operating margin and the return on capital employed show whether pricing and cost pass-through are working and whether the capital-intensive plants earn an adequate return.