Is Lincoln Electric Holdings, Inc. overvalued or undervalued?

As of 31 October 2024, Lincoln Electric Holdings, Inc. has moved from a fair to an expensive valuation grade. The company is currently overvalued, with a P/E ratio of 37, which is significantly higher than its peers such as Johnson Controls International Plc at 24.92 and Dover Corp. at 42.94. Additionally, Lincoln Electric's EV to EBITDA stands at 25.10, while its peers average lower, indicating a premium valuation.
Key financial ratios further illustrate this overvaluation: the Price to Book Value is 14.24, and the Return on Equity (ROE) is a strong 38.26%. Despite these robust performance metrics, the high valuation ratios suggest that the market may be pricing in excessive growth expectations. Notably, Lincoln Electric has outperformed the S&P 500 in the past year, returning 10.02% compared to the index's 10.26%, but this does not mitigate the concerns regarding its current valuation.