Ecolab Inc. (NYSE: ECL)

Sector: Basic Materials Industry: Specialty Chemicals CIK: 0000031462
Market Cap 80.35 Bn
P/B 11.63
P/E 80.18
P/S 5.93
ROIC (Qtr) 11.72
Div Yield % 0.76
Rev 1y % (Qtr) 4.16
Total Debt (Qtr) 8.67 Bn
Debt/Equity (Qtr) 0.89

About

Ecolab Inc., often recognized by its stock symbol ECL, is a prominent player in the global sustainability industry. The company has a rich history spanning over a century and boasts annual sales of $15 billion while employing over 48,000 associates worldwide. Ecolab's operations are divided into three segments: Global Industrial, Global Institutional & Specialty, and Global Healthcare & Life Sciences. These segments cater to diverse industries and markets, demonstrating Ecolab's broad reach and versatility. The Global Industrial segment offers...

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Price action

Investment thesis

Bull case

  • Healthy cash reserves of 1.96B provide 120.73x coverage of short-term debt 16.20M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 2.63B provides exceptional 134.14x coverage of minority interest expenses 19.60M, showing strong core operations.
  • Operating cash flow of 2.63B provides exceptional 11.02x coverage of interest expenses 238.50M, showing strong debt service capability.
  • Operating cash flow of 2.63B provides strong 19.50x coverage of stock compensation 134.80M, indicating sustainable incentive practices.
  • Robust free cash flow of 1.61B exceeds capital expenditure of 1.02B by 1.57x, indicating strong organic growth funding capability.

Bear case

  • Operating cash flow of 2.63B barely covers its investment activities of (1.36B), with a coverage ratio of -1.94, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 2.63B provides thin coverage of dividend payments of (725.80M) with a -3.62 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 1.96B provide limited coverage of acquisition spending of (271.90M), which is -7.19x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • High receivables of 3.11B relative to inventory of 1.53B (2.03 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Operating earnings of 2.64B show weak coverage of depreciation charges of 955.80M, with a 2.76 ratio indicating high capital intensity and potential reinvestment needs.

Segments Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Specialty Chemicals
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 LIN Linde Plc 218.63 Bn 38.41 6.61 25.93 Bn
2 SHW Sherwin Williams Co 110.34 Bn 170.54 11.54 13.58 Bn
3 ECL Ecolab Inc. 80.35 Bn 80.18 5.93 8.67 Bn
4 APD Air Products & Chemicals, Inc. 56.37 Bn 48.29 5.86 18.31 Bn
5 PPG Ppg Industries Inc 34.00 Bn 31.05 2.58 7.91 Bn
6 LYB LyondellBasell Industries N.V. 17.46 Bn 5.03 0.49 13.22 Bn
7 DD DuPont de Nemours, Inc. 16.63 Bn 3.65 0.32 8.90 Bn
8 ALB Albemarle Corp 14.44 Bn 48.94 6.36 3.63 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 3.64 1.52
EV to Cash from Ops. EV/CFO 43.47 12.52
EV to Debt EV to Debt 10.03 13.65
EV to EBIT EV/EBIT 56.22 21.45
EV to EBITDA EV/EBITDA 35.91 14.82
EV to Free Cash Flow [EV/FCF] EV/FCF 72.46 29.24
EV to Market Cap EV to Market Cap 1.08 3.84
EV to Revenue EV/Rev 6.42 89.11
Price to Book Value [P/B] P/B 11.63 5.48
Price to Earnings [P/E] P/E 80.18 16.02
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 2.73 -5.31
Dividend Payout Ratio % Div Payout % (Qtr) 37.10 -75.74
Dividend per Basic Share Div per Share (Qtr) 2.60 1.25
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 45.85 23.50
Interest Coverage Int. cover (Qtr) 11.07 -8.92
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -14.30 -1.67
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 55.09 72.99
Dividend Growth (1y) % Div 1y % (Qtr) 14.04 -3.00
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -4.22 -31.21
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -4.70 51.49
EBIT Growth (1y) % EBIT 1y % (Qtr) -7.25 0.57
EBT Growth (1y) % EBT 1y % (Qtr) -6.01 -80.35
EPS Growth (1y) % EPS 1y % (Qtr) -2.64 -90.82
FCF Growth (1y) % FCF 1y % (Qtr) -19.86 -50.40
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 4.13 219.02
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.66 0.70
Cash Payout Ratio Cash Payout (Qtr) 0.20 0.41
Cash Ratio Cash Ratio (Qtr) 0.47 1.28
Current Ratio Curr Ratio (Qtr) 1.70 3.42
Debt to Equity Ratio Debt/Equity (Qtr) 0.89 0.92
Interest Cover Ratio Int Coverage (Qtr) 11.07 -8.92
Times Interest Earned Times Interest Earned (Qtr) 11.07 -8.92
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 22.60 -333.97
EBIT Margin % EBIT Margin % (Qtr) 16.62 -374.34
EBT Margin % EBT Margin % (Qtr) 15.12 -379.75
Gross Margin % Gross Margin % (Qtr) 44.30 29.26
Net Profit Margin % Net Margin % (Qtr) 12.50 -380.67