ESAB Corp

ESAB: XNYS (USA)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	$62.00	Zxdtqt	Gszxgtnc

ESAB Earnings: We Expect Growing Equipment Sales to Help Accelerate Margin Expansion

Krzysztof Smalec

May 3, 2023

Narrow-moat-rated ESAB reported solid first-quarter results, featuring a 12% year-over-year increase in adjusted EBITDA. After a strong start to the year, management raised its outlook for full-year 2023 and now anticipates core organic revenue growth of 3.5%-5.5% (up from 3%-5%), adjusted EBITDA of $430 million-$450 million (up from $420 million-$440 million), and adjusted EPS of $3.85-$4.05 (up from $3.80-$4.00). We’ve increased our fair value estimate to $70 from $65, which reflects our more optimistic operating margin assumptions as well as time value of money. We view the name as modestly undervalued, with shares currently trading in 4-star territory.

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