Now is not the time to buy Ecolab stock

We believe there is a near-equal mix of good and bad in ECL stock given its overall Moderate operating performance and financial condition. But keeping in mind its Very High valuation, we think that the stock is Unattractive. Here is our multi-factor assessment.

But no matter how attractive, investing in a single stock carries high risk. Trefis High Quality Portfolio and is designed to reduce stock-specific risk while giving upside exposure

Let’s get into details of each of the assessed factors but before that, for quick background: With $80 Bil in market cap, Ecolab provides water, hygiene, and infection prevention solutions across industrial, institutional, healthcare, and life sciences sectors globally, supporting various manufacturing and processing industries.

[1] Valuation Looks Very High

This table highlights how ECL is valued vs broader market. For more details see: ECL Valuation Ratios

[2] Growth Is Weak

• Ecolab has seen its top line grow at an average rate of 5.2% over the last 3 years
• Its revenues have grown 0.6% from $16 Bil to $16 Bil in the last 12 months
• Also, its quarterly revenues grew 1.0% to $4.0 Bil in the most recent quarter from $4.0 Bil a year ago.

This table highlights how ECL is growing vs broader market. For more details see: ECL Revenue Comparison

[3] Profitability Appears Moderate

• ECL last 12 month operating income was $2.7 Bil representing operating margin of 17.3%
• With cash flow margin of 16.7%, it generated nearly $2.6 Bil in operating cash flow over this period
• For the same period, ECL generated nearly $2.1 Bil in net income, suggesting net margin of about 13.6%

This table highlights how ECL profitability vs broader market. For more details see: ECL Operating Income Comparison

[4] Financial Stability Looks Strong

• ECL Debt was $9.0 Bil at the end of the most recent quarter, while its current Market Cap is $80 Bil. This implies Debt-to-Equity Ratio of 11.2%
• ECL Cash (including cash equivalents) makes up $1.9 Bil of $24 Bil in total Assets. This yields a Cash-to-Assets Ratio of 8.1%

[4] Downturn Resilience Is Moderate

ECL saw an impact slightly better than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• ECL stock fell 44.3% from a high of $235.64 on 29 December 2021 to $131.35 on 3 November 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 5 June 2024
• Since then, the stock increased to a high of $281.83 on 13 August 2025 , and currently trades at $280.83

 
2020 Covid Pandemic

• ECL stock fell 40.5% from a high of $210.31 on 19 February 2020 to $125.22 on 23 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 28 May 2020

 
2008 Global Financial Crisis

• ECL stock fell 42.9% from a high of $52.30 on 24 December 2007 to $29.85 on 9 March 2009 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 13 October 2010

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read ECL Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – S&P 500, Russell, and S&P midcap. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.