It's been a great morning session for Ecolab investors, who saw their shares rise 7.2% to a price of $263.69 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
Ecolab Has Elevated P/B and P/E Ratios:
Ecolab Inc. provides water, hygiene, and infection prevention solutions and services in the United States and internationally. The company belongs to the Consumer Discretionary sector, which has an average price to earnings (P/E) ratio of 22.6 and an average price to book (P/B) ratio of 3.19. In contrast, Ecolab has a trailing 12 month P/E ratio of 37.0 and a P/B ratio of 11.24.
Ecolab has moved 11.2% over the last year compared to 22.5% for the S&P 500 — a difference of -11.3%. Ecolab has a 52 week high of $267.56 and a 52 week low of $212.71.
Growing Revenues and Significant Leverage Levels:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $12,222 | $12,562 | $11,790 | $12,733 | $14,188 | $15,320 |
| Operating Margins | 14% | 15% | 12% | 13% | 11% | 13% |
| Net Margins | 12% | 13% | -10% | 9% | 8% | 9% |
| Net Income (M) | $1,440 | $1,576 | -$1,186 | $1,130 | $1,092 | $1,372 |
| Net Interest Expense (M) | $236 | $214 | $305 | $231 | $252 | $349 |
| Depreciation & Amort. (M) | $536 | $569 | $594 | $604 | $618 | $617 |
| Diluted Shares (M) | 292 | 293 | 289 | 290 | 286 | 287 |
| Earnings Per Share | $4.88 | $5.33 | -$4.15 | $3.91 | $3.81 | $4.79 |
| EPS Growth | n/a | 9.22% | -177.86% | 194.22% | -2.56% | 25.72% |
| Avg. Price | $137.28 | $176.99 | $191.1 | $213.57 | $173.04 | n/a |
| P/E Ratio | 27.73 | 32.72 | -45.5 | 54.07 | 45.18 | nan |
| Free Cash Flow (M) | $1,499 | $1,689 | $1,371 | $1,419 | $1,076 | $1,637 |
| CAPEX (M) | $779 | $731 | $489 | $643 | $713 | $775 |
| EV / EBITDA | 20.6 | 23.68 | 30.4 | 31.52 | 26.41 | nan |
| Total Debt (M) | $7,044 | $6,354 | $6,687 | $8,758 | $8,580 | $8,182 |
| Net Debt / EBITDA | 3.08 | 2.58 | 2.73 | 3.81 | 3.66 | 2.78 |
| Current Ratio | 1.27 | 1.33 | 1.75 | 1.32 | 1.3 | 1.3 |
Ecolab has decent operating margins with a stable trend, flat EPS growth, and just enough current assets to cover current liabilities, as shown by its current ratio of 1.3. In addition, we note significant leverage levels. We also note that the company benefits from growing revenues and a flat capital expenditure trend and generally positive cash flows. Furthermore, Ecolab's financial statements do not display any obvious red flags.
