Strong Return on Equity
Healthy Gross Profit Margin
Strong Interest Coverage
🏆 Record Performance
🔒 Strong Competitive Position
🚀 Innovation and Investment Focus
📈 Growth Targets and Confidence
🔌 Digital Transformation Potential
High Price-to-Earnings Ratio
Moderate Net Profit Margin
Moderate Debt Levels
⚠️ Challenges in International Markets
🔄 Currency Headwinds
Ecolab Inc. is demonstrating strong business quality with a solid competitive position and innovative growth strategies. The company's focus on digital transformation and targeted investments in high-growth markets supports favorable future prospects. However, challenges in international growth and currency headwinds may pose risks to achieving its full potential.
Analysis Date: February 11, 2025
Last Updated: March 12, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$285.48
Current Market Price: $236.73
IV/P Ratio: 1.21x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
17.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for ECL
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (32.07)
P/B ratio ≤ 1.5 (7.73)
Current ratio ≥ 2.0 (1.26x)
Long-term debt < Net current assets (6.10x)
Margin of safety (17.0%)
ECL does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
ECL's gross profit margin of approximately 43.49% reflects strong pricing power and cost management, indicating a solid foundation for profitability.
While ECL has a net profit margin of 13.42%, it may suggest room for improvement in controlling costs relative to revenue.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
25.00%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
2.11%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
43.49%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
13.42%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
ECL has an interest coverage ratio of 8.78, indicating that the company can easily meet its interest obligations, reflecting a strong financial position.
With a debt-to-equity ratio of 0.93, ECL is moderately leveraged, indicating potential risks associated with higher debt levels in adverse conditions.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.93x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
1.26x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
Ecolab Inc. reported record sales, earnings, margins, and free cash flow for 2024, indicating strong operational performance and effective management. The company's organic operating income margin increased by 290 basis points year-over-year, showcasing consistent margin improvement.
Ecolab's business model is characterized by high customer retention and loyalty, with 92% of sales produced locally, protecting it from external tariff impacts. The company also leverages proprietary technology, enhancing customer engagement and increasing stickiness of its services.
The company is investing significantly in its digital initiatives, particularly Ecolab Digital and its high-tech business targeting data centers and microelectronics, which are expected to drive future growth and margin expansion.
While the U.S. market is performing strongly, international sales growth remains low single digits due to uneven macroeconomic trends, which may pose risks to overall revenue growth.
Ecolab is targeting 12 to 15% earnings growth for 2025, supported by solid organic sales growth and strong performance in its high-growth segments, including data centers and life sciences.
The company plans to enhance transparency by reporting digital sales starting in 2025, which is expected to reveal high-growth opportunities and provide better visibility on its innovation trajectory.
Ecolab expects currency translation to negatively impact reported sales growth by approximately 3% and adjusted EPS growth by about 4%, which could hinder overall financial performance.