Linde plc LIN
Verdict: Sell. Fair value $392 against a price of $433 on 6 Jan 2026, 9% below the price.
In plain words
The case for: Wide competitive moat provides durability. Market leadership enables pricing power. Industry tailwinds with growing market.
The case against: The OCF / Net Income ratio has declined for two consecutive years, from a very high 2.14 in 2022 to....
Main risks
- Declining Free Cash Flow Trend: FCF has fallen from $6.64B in 2021 to a TTM figure of $5.08B, a concerning trend that suggests deteriorating cash generation efficiency or rising capital needs.
- Stagnant Revenue Growth: Top-line growth is nearly flat, with a 3-year CAGR of only 2.3% and a 1-year rate below 0.5%. This indicates potential market saturation or competitive pressures.
- Questionable Capital Allocation Efficiency: Despite high CapEx ($5.05B TTM, ~50% of OCF), revenue growth is minimal. The calculated 3-year ROIIC of 10.35% is only adequate and suggests that recent large investments are not generating high-tier returns.
- The OCF / Net Income ratio has declined for two consecutive years, from a very high 2.14 in 2022 to...
- Valuation prices in optimistic scenario (limited margin for error)
- The OCF / Net Income ratio has declined for two consecutive years, from a very high 2.14 in 2022 to 1.50 in 2023, and further to 1.44 in 2024. While the absolute level remains strong (>1.0), this persistent downward trend suggests increasing pressure on working capital or a change in earnings composition.